Question

Devi and Anupam were partners in a firm. Their fixed capitals were ₹9,00,000 and ₹6,00,000 respectively on 1^st April, 2023. The partnership deed provided for the following:
(i) Interest on capital @ 12% p.a.
(ii) Interest on drawings @ 15% p.a. 
On 1^st May, 2023, Devi introduced additional capital of ₹1,00,000 and on 1^st June, 2023, Anupam withdrew ₹2,00,000 from her capital. 
Devi withdrew ₹4,000 per month for her personal use and Anupam withdrew ₹2,000 per month for her personal use. 
The net divisible profit of the firm for the year ended 31^st March, 2024 after allowing interest on capital and charging interest on drawings was ₹3,00,000. 
Prepare Current Accounts of the partners.

Hint:

When capitals are fixed, interest on capital and drawings are adjusted through current accounts. Always check drawing patterns to calculate average period.

Answer 1

Step 1: Calculate Interest on Capital

Devi:
- Initial Capital = ₹9,00,000 → Interest = ₹9,00,000 × 12% = ₹1,08,000 
- Additional Capital = ₹1,00,000 from 1st May 2023 to 31st March 2024 = 11 months 
Interest = ₹1,00,000 × 12% × $\frac{11}{12}$ = ₹11,000 
Total Interest for Devi = ₹1,08,000 + ₹11,000 = ₹1,19,000

Anupam:
- Initial Capital = ₹6,00,000 for 2 months (Apr & May)
Interest = ₹6,00,000 × 12% × $\frac{2}{12}$ = ₹12,000 
- Reduced Capital = ₹4,00,000 (from 1st June onwards) for 10 months
Interest = ₹4,00,000 × 12% × $\frac{10}{12}$ = ₹40,000 
Total Interest for Anupam = ₹12,000 + ₹40,000 = ₹52,000

Step 2: Calculate Interest on Drawings

Devi: ₹4,000 per month for 12 months → Total = ₹48,000
Average period = 6.5 months
Interest = ₹48,000 × 15% × $\frac{6.5}{12}$ = ₹3,900

Anupam: ₹2,000 per month for 12 months → Total = ₹24,000
Interest = ₹24,000 × 15% × $\frac{6.5}{12}$ = ₹1,950

Step 3: Distribution of Profit (after adjustments)
Net Divisible Profit = ₹3,00,000
Profit sharing ratio = 1:1 (assumed equal)
Each Partner’s Share = ₹1,50,000

Step 4: Current Account Preparation

Devi’s Current Account:
 

To Drawings	₹48,000
To Interest on Drawings	₹3,900
By Interest on Capital	₹1,19,000
By Share of Profit	₹1,50,000
Closing Balance	₹1,69,100

Anupam’s Current Account:
 

To Drawings	₹24,000
To Interest on Drawings	₹1,950
By Interest on Capital	₹52,000
By Share of Profit	₹1,50,000
Closing Balance	₹1,76,050