Question

From the following balance sheets of Rajan and Devan who share profits and losses 2 : 1, calculate interest on capital at 6% p.a. for the year ending 31^st December, 2018.

Balance sheet as on 31^st December, 2018

Liabilities	₹	₹	Assets	₹
Capital accounts:			Sundry assets	2,20,000
Rajan	1,00,000
Devan	80,000	1,80,000
Profit and loss appropriation A/c		40,000
		2,20,000		2,20,000

On 1^st April, 2018, Rajan introduced an additional capital of ₹ 40,000 and on 1^st September, 2018, Devan introduced ₹ 30,000. Drawings of Rajan and Devan during the year were ₹ 20,000 and ₹ 10,000 respectively. Profit earned during the year was ₹ 70,000.

Answer 1

Particulars	Rajan	Devan
Capital	1,00,000	80,000
(+) Drawings	20,000	10,000
	1,20,000	90,000
(−) Additional Capital	40,000	30,000
	80,000	60,000
(−) Profit	20,000	10,000
	60,000	50,000

 

Interest on Capital
Rajan:		Devan:
`60,000 xx 6/100`	3,600	`50,000 xx 6/100`	3,000
Additional capital:		Additional capital:
`40,000 xx 6/10 xx 9/12`	1,800	`30,000 xx 6/100 xx 4/12`	600
Rajan's Total Interest:	5,400	Devan's Total Interest:	3,600