Question

A, B and C were partners sharing profits in the ratio of 1 : 2 : 3. A withdrew ₹ 10,000 every month, B withdrew ₹ 1,20,000 during the year and C withdrew ₹ 30,000 during each quarter. It was discovered that for the year ending 31st March 2024, interest on drawings was charged @ 7% p.a. whereas there is no provision for interest on drawings in the partnership deed. In the rectifying entry:

Options

• Cr. A ₹ 4,200 and Dr. C ₹ 4,200

• Dr. A ₹ 4,200 and Cr. C ₹ 4,200

• Cr. A ₹ 2,100 and Dr. C ₹ 2,100

• Dr. A ₹ 2,100 and Cr. C ₹ 2,100

Answer 1

Cr. A ₹ 2,100 and Dr. C ₹ 2,100

Explanation:

A’s Total Drawings = 10,000 × 12

= 1,20,000

B’s Total Drawings = ₹ 1,20,000

C’s Total Drawings = 30,000 × 4

= 1,20,000

Interest on each partner’s drawings will be charged for an average period of 6 months.

Interest on each partner’s drawings = `1,20,000 xx 7/100 xx 6/12`

= 4,200

Table Showing Adjustment
Particulars	A (₹)	B (₹)	C (₹)	Total (₹)
Cancellation of Interest on Drawings (Cr.)	4,200	4,200	4,200	12,600
Division of ₹12,600 in 1 : 2 : 3 (Dr.)	2,100	4,200	6,300	12,600
	(Cr.) 2,100	-	(Dr.) 2,100	-