Question

Q. 45. A and B were partners sharing profits in 2:1 ratio. During the year ended
31st March, 2016, A's drawings were 50,000 per month drawn in the beginning of
every month and B's drawings were 25.000 per month drawn at the end of every
month. After the preparation of final accounts, it was discovered that interest on A's
drawings @ 12% p.a. was not taken into consideration. Give the necessary adjusting
entry on 1st April, 2016.
13.000
Dr.
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Answer 1

Answer:

Since A's interest is 12% pa which can be requoted as 1% per month.

So actually A's earnings are :

50000 + 1% of 50000 = 50500 rup.

So,total profit=(50500+25000)×12

= 906000 rup.

So actual profit of A is 906000×2/3 which is equal to 604000 rup. and B's profit is 302000 rup. yearly

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