Question

From the following balance sheet of X and Y, calculate interest on capitals @ 10% p.a. payable to X and Y for the year ended 31st December, 2008.

Liabilities	Amount	Assets	Amount
X's Capital	50,000	Sundry Assets	1, 00,000
Y's capital	40,000	Drawings X	10,000
P& L appropriation A/c (1998)	20,000
	1,10,000		1,10,000

During the year 2008, X's drawings were Rs. 10,000 and Y's Drawing were Rs. 3,000. Profit during the year, 2008 was Rs.30, 000. 

Answer 1

Drawings (Previously deducted).

Calculation of Opening Capitals	X Rs.	X Rs.
Capitals as on 31st Dec., 2008	50,000	40,000
Add: Drawings (Previously deducted).	-	3,000
Less: Profit distributed (30,000- 20,000' equally	5,000	5,000
Opening Capitals	45,000	38,000
Interest on 'capitals: @ 10% p.a;	4,500	3,800

Working Notes:

(1) As X’s drawings are shown in the Balance Sheet, it means his drawings are not deducted. From his .capital till now, so his drawings are not included back. 

(2) Profits for 2008 were Rs. 30,000 and profits of Rs. 20,000• are, shown in the Balance Sheet, which means only Rs. 10,000 profits were distributed between the partners.