Question

A, B, and C were partners sharing profits in the ratio of 1 : 2 : 3. A withdrew ₹ 5,000 every month, B withdrew ₹ 60,000 during the year and C withdrew ₹ 15,000 during each quarter. It was discovered that for the year ending 31st March 2024, interest on drawings was charged @ 8% p.a., whereas there is no provision for interest on drawings in the partnership deed. Pass the necessary rectifying entry.

Hint: Interest on each partner’s drawings is ₹ 2,400.

Answer 1

Calculation of interest on drawings:

A = `60,000 xx 8/100 xx 6/12`

= ₹ 2,400

B = `60,000 xx 8/100 xx 6/12`

= ₹ 2,400

C = `60,000 xx 8/100 xx 6/12`

= ₹ 2,400

Table showing Adjustment
Particulars	A	B	C	Total
Cancellation of Interest on Drawings (Cr.)	2,400	2,400	2,400	7,200
Division of ₹ 7,200 in 1 : 2 : 3 (Dr.)	1,200	2,400	3,600	7,200
	(Cr.) 1,200		(Dr.) 1,200

 

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2024
March 31	C’s Capital A/c   ...Dr.		1,200	-
	To A’s Capital A/c		-	1,200
	(Adjustment for interest on drawings wrongly charged)