Question

A and B were partners in a firm sharing profits in the ratio of 2 : 1. The partnership deed provided interest on drawings @ 12% p.a. During the year:

1. A’s drawings were ₹ 5,000 per month in the beginning of every month.
2. B’s drawings were ₹ 10,000 per quarter.

Net profit for the year was distributed without charging interest on drawings. In the adjustment entry:

Options

• Cr. A ₹ 2,100 and Dr. B ₹ 2,100

• Cr. A ₹ 1,900 and Dr. B ₹ 1,900

• Dr. A ₹ 300 and Cr. B ₹ 300

• Cr. A ₹ 300 and Dr. B ₹ 300

Answer 1

Cr. A ₹ 300 and Dr. B ₹ 300

Explanation:

Interest on A’s Drawings = `60,000 xx 12/100 xx 6.5/12`

= ₹ 3,900

Interest on B’s Drawings = `40,000 xx 12/100 xx 6/12`

= ₹ 2,400

Adjustment Table
Particulars	A (₹)	B (₹)	Total (₹)
Interest on Drawings (Dr.)	3,900	2,400	6,300
Division of ₹ 6,300 in 2 : l (Cr.)	4,200	2,100	6,300
	(Cr.) 300	(Dr.) 300	-