Question

A and B are partners in a firm sharing profits in the ratio of $3:2$. On $\mathrm{31.3.2014}$, the balance sheet of the firm was as follows :
The Profit of $Rs80,000$ for the year ended $\mathrm{31.3.2014}$ was divided between the partners without allowing interest on capital $@12\%$ per annum and a salary to A at $Rs1,000$ per month. During the year A withdrew $Rs10,000$ and B $Rs20,000$.
Pass a single journal entry to rectify the error.

Answer 1

calculation of Interest of capital
Interest on A's Capital : $22,000\times \frac{12}{100}=2,640$
Interest on B's Capital : $8,000\times \frac{12}{100}=960$