1. Mukut, Kirit and Rahul are partners. They have no deed of partnership, but agree, after the division of profits, that the capital of each be credited with interest at 5% per annum for the year which hasjust elapsed.The capitals are fixed at : 37,500 for Mukut, 75,000 for Kirit and * 4,500 for Rahul.Show how the interest on capital may be accounted for by entries in the partners' current accountsonly.

1. Mukut, Kirit and Rahul are partners. They have no deed of partnersh

1.	1. Mukut, Kirit and Rahul are partners. They have no deed of partnership, but agree, after the division of profits, that the capital of each be credited with interest at 5% per annum for the year which hasjust elapsed.The capitals are fixed at : 37,500 for Mukut, 75,000 for Kirit and * 4,500 for Rahul.Show how the interest on capital may be accounted for by entries in the partners' current accountsonly.
Answer» tion:ANSWERProfit & Loss Appropriation A/cFor the year ended 31st MARCH 2017ParticularsRs.Rs.ParticularsRs.Rs.To Interest on capital By Profit3,06,000 Moli25,000 Interest on B’s loan6,0003,00,000Bhola40,000 By Interest on Drawings Raj20,00085,000Moli1,800 To Salary (Moli) 4,000Bhola3,300 To Commission (Bhola) 30,000Raj2,4007,500To Profit TRANSFERRED to: Moli’s Current19,250 Bhola’s Current19,250 Raj Current1,50,0001,88,500 3,07,500 3,07,500 PARTNER’s Current A/cParticularsMoliBholaRajParticularsMoliBholaRajTo Drawings40,00060,00080,000By Int. on capital25,00040,00020,000To Int. on draw.1,8003,3002,400By Salary4,000--To Balance c/d6,45025,95087,600By Commission-30,000- By P/L App (Profit)19,25019,2501,50,000 48,25089,2501,70,000 48,25089,2501,70,000 Partner’s Capital A/cParticularsMoliBholaRajParticularsMoliBholaRajTo Balance c/d5,00,0008,00,0004,00,000By Balance b/d5,00,0008,00,0004,00,000 5,00,0008,00,0004,00,000 5,00,0008,00,0004,00,000 WORKING Note:Mukut= 5,00,000 X 5/100 = 25,000 kirit = 8,00,000 X 5/100 = 40,000 Rahul = 4,00,000 X 5/100 = 20,000 CALCULATION of interest on Bhola’s loan:1,00,000 X 6/100 = 6,000 Calculation of interest on drawings:Mukut = (10,000 X 4) X 12/100 X 4.5/12 = 40,000 X 12/100 X 4.5/12 = 1,800 kirit = (5,000 X 12) X 12/100 X 5.5/12 = 60,000 X 12/100 X 5.5/12 = 3,300 Rahul = (40,000 X 2) X 12/100 X 3/12 = 80,000 X 12/100 X 3/12 = 2,400 Calculation of commission of kirit: (3,06,000 – 6,000) X 10/100 = 30,000 Distribution of Profit:Moli = 1,88,500 X 3/10 = 56,550 -37,300 = 19,250 Bhola = 1,88,500 X 3/10 = 56,550 – 37,300 = 19,250 Raj = 1,88,500 X 4/10 = 75,400 + 74, 600 = 1,50,000 Deficiency of Raj’s Profit Rs. 74,600 borne by Moli and Bhola in 3 : 3 (1 : 1). Moli = 74,600 X ½ = -37,300 Bhola = 74,600 X ½ = 37,300

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