PCC - Partnership Admission Query

666 views 2 replies

Ram and Rahim start business with capital of Rs. 50,000 and Rs. 30,000 on 1st January, 2005. Rahim is entitled to a salary of Rs. 400 per month. Interest is allowed on capitals and is charged on drawings at 6% per annum. Profits are to be distributed equally after the above noted adjustments. During the year Ram withdrew Rs. 8,000 and Rahim withdrew Rs. 10,000. The profit for the year before allowing for the terms of the Partnership Deed came to Rs. 30,000. Assuming the capitals to be fixed, prepare the Capital and Current Accounts of the partners.

 

----------------------------------

 

In this problem why should we divide interest on drawings amount by 2 ? It is done so in ICAI material, please let me know the reason.

Replies (2)

The reason for dividing by 2 for interest on drawings is because Drawings are made during the year. The date of drawings are not given. In such case it has to be assumed that drawing are made evenly throughout the year.. Thus when it is made evenly , it is divided by 2 so as to get an avg. figure of use of drawings by each partner. In this case we get avg as 6 months for which drawings are used by partners.

yes....

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
22 June 2026
Accountant

Global Image Technologies Private Limited

New Delhi

MBA

View Details
Company
ARTICLESHIP 28 June 2026
Article Assistant

Sharma Chetan And Company

Gurgaon

CA Inter

View Details
Company
ARTICLESHIP 29 June 2026
Article Assistant

Alvino Consultancy LLP

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 09 June 2026
Article Trainee

Numbertree LLP

Mumbai

CA Inter

View Details
Company
20 June 2026
Chartered Accountant

ANV & Company

New Delhi

CA

View Details
Company
10 June 2026
Senior Account Executive

JDS Advisory LLP

Ahmedabad

CA Inter

View Details
Company
ARTICLESHIP 08 June 2026
Internal & Taxation Article

O P Bagla & Co LLP

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 30 June 2026
Taxation Content Writer Intern

Interactive Media Pvt Ltd.

New Delhi

CA Inter

View Details