Question

Sudha and Sudhir were partners in a firm sharing profits and losses in the ratio of 4 : 1. On 1st April, 2023, their fixed capitals were ₹12,00,000 and ₹4,00,000 respectively. On 1st July, 2023, Sudha invested ₹2,00,000 as additional capital. On 1st August, 2023, Sudhir withdrew ₹50,000 from his capital. 
The partnership deed provided for the following:
(i) Interest on capital @ 6% p.a.
(ii) Interest on drawings @ 8% p.a.
During the year, Sudha withdrew ₹60,000 and Sudhir withdrew ₹40,000 for personal use. After providing interest on capital and charging interest on drawings, the net profit of the firm for the year ended 31st March, 2024 was ₹3,50,000. 
Prepare Current Accounts of Sudha and Sudhir. 

Hint:

Interest on capital is calculated on time-weighted amounts. Adjust additional capital and withdrawals using months carefully.

Answer 1

Sudha’s Current Account 

Dr.		Cr.
Particulars	₹	Particulars	₹
Drawings	60,000	Interest on Capital	82,000
Interest on Drawings	2,400	Profit transferred to Capital A/c	2,80,000
		Total	3,62,000
Balance c/d	2,99,600
Total	3,62,000

 

Sudhir’s Current Account

Dr.		Cr.
Particulars	₹	Particulars	₹
Drawings	40,000	Interest on Capital	22,500
Interest on Drawings	1,600	Profit transferred to Capital A/c	70,000
		Total	92,500
Balance c/d	50,900
Total	92,500

 

Working Notes:

• Interest on Sudha’s Capital:
  • ₹12,00,000 × 6% = ₹72,000 (for full year)
  • Additional ₹2,00,000 × 6% × (9/12) = ₹10,000
  • Total = ₹72,000 + ₹10,000 = ₹82,000
• Interest on Sudhir’s Capital:
  • ₹4,00,000 × 6% = ₹24,000 (full year)
  • Less: ₹50,000 withdrawn on 1st August → Interest saved for 8 months: ₹50,000 × 6% × (8/12) = ₹2,000
  • Total = ₹24,000 - ₹2,000 = ₹22,000
• Interest on Drawings:
  • Sudha: ₹60,000 × 8% × (6/12) = ₹2,400
  • Sudhir: ₹40,000 × 8% × (6/12) = ₹1,600
• Profit Distribution: ₹3,50,000 in 4:1 ratio = ₹2,80,000 (Sudha), ₹70,000 (Sudhir)