Sharma and Verma were partners in a firm sharing profits and losses in the ratio of 3:2. Their fixed capitals were ₹14,00,000 and ₹10,00,000 respectively. The partnership deed provided for the following:

(i) Interest on capital @ 10% per annum.

(ii) Interest on drawings @ 12% per annum.

During the year ended 31.03.2023, Sharma withdrew ₹2,00,000 and Verma withdrew ₹1,00,000. After preparing the accounts for the year ended 31.03.2023, it was realised that interest on capital was not allowed and interest on drawings was not charged.

Showing your working notes clearly pass necessary journal entries in the books of the firm to rectify the above error.

Marks-3, CBSE:2022-23/Compartment/Q-20*

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