Question

hers' Capitals
26. A and B are partners in the ratio of 3: 2. The firm maintains Fluctuating Capital Accounts and the balance
of the same as on 31st March, 2020 amounted to 1,60,000 and 1,40,000 for A and B respectively. Their
drawings during the year were 30,000 each.
As per Partnership Deed, interest on capital @ 10% p.a. on opening capitals had been provided to them.
Calculate opening capitals of partners given that their profit was 90,000. Show your workings clearly.
(CBSE Sample Paper 2020)
[Ans.:​

Answer 1

ANSWER :

• ❖ If A and B are partners in the ratio of 3 : 2 and the firm maintains Fluctuating Capital Accounts and the balance of the same as on 31st March, 2020 amounted to 1,60,000 and 1,40,000 for A and B respectively. Again, their drawings during the year were 30,000 each and as per Partnership Deed, interest on capital @ 10% p.a. on opening capitals had been provided to them and their profit is Rs. 90,000; then the Opening Capital of partner A is Rs. 1,38,364 and the Opening Capital of partner B is Rs. 1,31,636.

___________________________________________________________

SOLUTION :

❒ Given :-

• A and B are partners in the ratio of 3 : 2.

• Closing Capital of A and B are Rs. 1,60,000 and Rs. 1,40,000 respectively.

• Drawings of A and B during the year are Rs. 30,000 each.

• Profit of the year including interest on capital is Rs. 90,000.

• Interest on Capital is charged @10% p.a.

❒ To Calculate :-

• Opening Capital of A = ?

• Opening Capital of B = ?

____________________________________________

❒ Working Note :-

Here,

• Closing Capital of A = Rs. 1,60,000

• Closing Capital of B = Rs. 1,40,000

• Drawings of A = Rs. 30,000

• Drawings of B = Rs. 30,000

• Profits (Including interest on Capital) = Rs. 90,000

• Interest on Capital = @10% p.a.

Thus,

• ✎ Total Closing Capital = Rs. 1,60,000 + Rs. 1,40,000 = Rs. 3,00,000

Add : Total Drawings = Rs. 30,000 + Rs. 30,000 = Rs. 60,000

• ✎ Amount = Rs. 3,60,000

Less : Profits (Including interest on Capital) = Rs. 90,000

• ✎ Total Opening Capital = Rs. 2,70,000

Again,

• ❍ Amount of Interest on Opening Capital @10% p.a. = 10% of Rs. 2,70,000

➨ Amount of Interest on Opening Capital = $\rm{\dfrac{10}{100}}$ × Rs. 2,70,000

∴ Amount of Interest on Capital = Rs. 27,000

• ❍ Divisible Profits = Profits including Interest on Capital - Amount of Interest on Capital

➨ Divisible Profits = Rs. 90,000 - Rs. 27,000

∴ Divisible Profits = Rs. 63,000

____________________________________________

❒ Calculation of Opening Capital of A :-

Here,

• Share of profit of A = $\rm{\dfrac{3}{5}}$

• Closing Capital of A = Rs. 1,60,000

• Drawings of A = Rs. 30,000

• Interest on Capital = @10% p.a.

• Total Divisible Profit = Rs. 63,000

∴ Amount of share of Profit of A = Rs. 63,000 × $\rm{\dfrac{3}{5}}$

⇒ Amount of share of Profit of A = Rs. 37,800

Now,

• ✠ Closing Capital of A = Rs. 1,60,000

Add : Drawings of A = Rs. 30,000

• ✠ Total Amount = Rs. 1,90,000

Less : Share of Profit of A = Rs. 37,800

• ✠ Remaining Amount = Rs. 1,52,200

Less : Interest on Capital of A ( Rs. 1,52,200 × $\rm{\dfrac{10}{110}}$ ) = Rs. 13,836

• ★ Opening Capital of A = Rs. 1,38,364

____________________________________________

❒ Calculation of Opening Capital of B :-

Here,

• Share of profit of B = $\rm{\dfrac{2}{5}}$

• Closing Capital of B = Rs. 1,40,000

• Drawings of B = Rs. 30,000

• Interest on Capital = @10% p.a.

• Total Divisible Profit = Rs. 63,000

∴ Amount of share of Profit of B = Rs. 63,000 × $\rm{\dfrac{2}{5}}$

⇒ Amount of share of Profit of B = Rs. 25,200

Now,

• ✠ Closing Capital of B = Rs. 1,40,000

Add : Drawings of B = Rs. 30,000

• ✠ Total Amount = Rs. 1,70,000

Less : Share of Profit of B = Rs. 25,200

• ✠ Remaining Amount = Rs. 1,44,800

Less : Interest on Capital of B ( Rs. 1,44,800 × $\rm{\dfrac{10}{110}}$ ) = Rs. 13,164

• ★ Opening Capital of B = Rs. 1,31,636