Question

$A$ and $B$ are partners in a business and their capitals at the end of the year were $Rs.7,00,000$ and $Rs6,00,000$ respectively. Calculate their opening capitals considering the following information:
(a) Drawings of $A$ and $B$ for the year were $Rs.75,000$ and $Rs.50,000$ respectively.
(b) $B$ introduced capital of $Rs.1,00,000$ during the year.
(c) Interest on capital credited to the Capital Accounts of $A$ and $B$ were $Rs.15,000$ and $Rs.10,000$ respectively.
(d) Interest on drawings debited to the Capital Accounts of $A$ and $B$ were $Rs.7,500$ and $Rs.5,000$ respectively.
(e) Share of profit credited to Capital Accounts was $Rs.1,00,000$ each.

Answer 1

Calculation of Opening Capital

A B

Closing capital 7,00,000 6,00,000

Add:Drawings 75,000 50,000

Interest on drawings 7500 5000

Less:-Additional capital nil (1,00,000)

Interest on capital ( 15,000) (10,000)

Share of profits (1,00,000) (1,00,000)

Opening capital 6,67,500 4,45,000