question_answer

As an accountant you are required to answer the following questions 23 to 28:

Harshit and Aniket both are childhood friends. After completing their education, they decided to start a partnership firm. They signed a document (partnership deed) which contains all the terms and conditions. They also decided to maintain books of accounts themselves.

On 31st March 2021 Their Balance Sheet was as follows:

Liabilities Amount Assets Amount Capitals: Harshit 4,00,000 Fixed Assets                         7,20,000 Aniket 2,80,000 Current Assets 80,000 Creditors 1,20,000 8,00,000 8,00,000

During the year 2020-21 Harshit paid his brother's college fee Rs.60,000 and Aniket paid his Mother's medical bill of Rs.80,000 out of the firm's cash.

Profit earned by the firm during the year Rs.2,00,000.

Due to less knowledge of accounting they distributed profit without providing interest on capital @ 5% p.a. and without charging interest on drawings @ 12% p.a.

After realizing their mistake, they hired a professional accountant to maintain their accounts as per the guidelines of Partnership Act and their Partnership Deed. All mistakes were identified and rectified by the accountant.

Total Opening Capital of the firm as on 1st April 2020 was:

A) 6,80,000 

B) 8,20,000

C) 6,20,000

D) 8,80,000