Question

A and B were partners sharing profits in 2 : 1 ratio. During the year ended 31st March, 2024, A’s drawings were ₹ 10,000 per month drawn in the beginning of every month and B’s drawings were ₹ 10,000 per month drawn at the end of every month. After the preparation of final accounts, it was discovered that interest on drawings @ 12% p.a. was not taken into consideration. In the adjustment entry ______.

Options

• A will be Debited by ₹ 7,800 and B will be Debited by ₹ 6,600

• A will be Credited by ₹ 9,600, and B will be Credited by ₹ 4,800

• A will be Credited and B will be Debited by ₹ 1,800

• A will be Debited and B will be Credited by ₹ 1,800

Answer 1

A and B were partners sharing profits in 2 : 1 ratio. During the year ended 31st March, 2024, A’s drawings were ₹ 10,000 per month drawn in the beginning of every month, and B’s drawings were ₹ 10,000 per month drawn at the end of every month. After the preparation of final accounts, it was discovered that interest on drawings @ 12% p.a. was not taken into consideration. In the adjustment entry A will be Credited and B will be Debited by ₹ 1,800.

Explanation:

A’s Total Drawings = ₹ 10,000 × 12

= 1,20,000

When an equal amount is withdrawn at the beginning of every month, interest is charged for an average period of 6.5 months.

Hence, Interest on A’s Drawings = `1,20,000 xx 12/100 xx 6.5/12`

= 7,800

B’s Total Drawings = ₹ 10,000 × 12

= 1,20,000

When an equal amount is withdrawn at the end of every month, interest is charged for an average period of 5.5 months.

Hence, Interest on B’s Drawings = `1,20,000 xx 12/100 xx 5.5/12`

= 6,600

Total Interest on Drawings = 7,800 + 6,600

= 14,400

Table Showing Adjustment
Particulars	A (₹)	B (₹)	Total (₹)
Interest on Drawings (Dr.)	7,800	6,600	14,400
Division of ₹ 14,400 in 2 : 1 (Cr.)	9,600	4,800	14,400
	(Cr.) 1,800	(Dr.) 1,800	−