Priya and Shreya are partners in a firm sharing profits and losses in the ratio of 3:2. Interest on capital is allowed at 10% p.a. Balance Sheet at the end of 31.12. 2014 of the firm are as follows:
Balance Sheet as on 31 December, 2014
Liabilities |
Amount (Rs.) |
Assets |
Amount (Rs.) |
Capital accounts: |
|
|
|
Priya |
40,000 |
Sundry Assets |
70,000 |
Shreya |
30,000 |
Drawings of Priya |
10,000 |
Profit & Loss Appropriation Account |
10,000 |
|
|
|
80,000 |
|
80,000 |
During the year, Priya withdrew Rs.10,000 and Shreya withdrew Rs.8,000. Profits for the year 2014 before charging interest on capital amounted to Rs. 17,000. You are required to calculate interest on capital due to partners, prepare a Profit & Loss Appropriation A/c, Capital accounts of Partners and Revised Balance Sheet of the firm, presuming that no adjustments for interest on capital have so far been made.