Nawab, Shanaya and Hrithik are partners sharing profits and losses in…

Nawab, Shanaya and Hrithik are partners sharing profits and losses in the ratio of 5 : 3 : 2. The partnership deed provides for charging interest on drawings @10% p.a. The drawings of Nawab, Shanaya and Hrithik, made evenly during the year, were ₹20,000, ₹15,000 and ₹10,000 respectively. After final accounts have been prepared, it was discovered that interest on drawings had not been charged. The adjusting entry will be :

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Shanaya Capital A/c Dr. 75 Hrithik Capital A/c Dr. 50 To Nawab Capital A/c 125

The drawings were made evenly during the year, so interest is charged for an average of six months.

Interest: Nawab ₹20,000 × 10% × 6/12 = ₹1,000; Shanaya ₹750; Hrithik ₹500; total ₹2,250

Had it been charged, ₹2,250 would have been shared 5 : 3 : 2 = ₹1,125, ₹675, ₹450

Net effect: Nawab −1,000 + 1,125 = Cr. ₹125; Shanaya −750 + 675 = Dr. ₹75; Hrithik −500 + 450 = Dr. ₹50

So Shanaya and Hrithik are debited ₹75 and ₹50, and Nawab is credited ₹125.

NCERT (2026-27 edition):
Illustration

Extract from the NCERT textbook

NCERT (2026-27 edition):
When Dates of Withdrawal are not specified – “… When the total amount withdrawn is given but the dates of withdrawals are not specified, it is assumed that the amount was withdrawn evenly throughout the year. For example; Shakila withdrew Rs. 60,000 from partnership firm during the year ending March 31, 2020 and the interest on drawings is to be charged at the rate of 8 per cent per annum. For calculation of interest, the period would be taken as six months, which is the average period assuming, that amount is withdrawn evenly in the middle of the month, throughout the year.”