Question : A, B and C were carrying on business with the following assets with effect from 1st April, 2018 : Furniture Rs.18,000; Machine Rs.72,000; Cash Rs.10,000; Debtors Rs.20,000. Their profit-sharing ratio was 5:3:2. Capital is also shared in the same ratio. B died on 30th September, 2018. His son claimed his father's interest in the firm.
The following was the settlement:
(1) Allow his capital to his credit on the date of death.
(2) Give 5% p.a. interest on his capital.
(3) He had been drawing @ Rs. 600 per month which he withdrew at the beginning of each month. He be allowed to retain these drawings as a part of his share of profit.
(4) Interest @ 6% p.a. be charged on his drawings.
(5) Goodwill was evaluated twice the average of profits which were Rs.21,000.
Question:
Amount of Interest On Drawing is
Option 1: Rs 36
Option 2: Rs 63
Option 3: Rs 3,600
Option 4: Rs 800
Correct Answer: Rs 63
Solution : Answer = Rs 63
| Memorandum Balance Sheet | |||
| Liabilities | Amount | Assets | Amount |
| Capital | Furniture | 18,000 | |
| A | 60,000 | Machinery | 72,000 |
| B(1,20,000×3/10) | 36,000 | Cash | 10,000 |
| C | 24,000 | Debtors | 20,000 |
| 1,20,000 | 1,20,000 | ||
| B's capital a/c | |||
| To Drawings(600×6) | 3,600 | By Bal b/d | 36,000 |
| To Interest on drawings | 63 | By Int on capital | 1,000 |
| To B's executor a/c(b/f) | 49,087 | By Profit and loss suspence | 3,150 |
| ($\left.21000 \times \frac{2}{6}× \frac{3}{10} \times \frac{6}{12}\right)$ | |||
| A's capital | 9,000 | ||
| C's capital | 3,600 | ||
| 52,750 | 52,750 | ||
Good will= 21,000×2= 42,000
B's share= ($\left.42000 \times \frac{3}{10}\right)$= 12,600(5:2)
Hence, the correct option is 2.
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