A and B are partners, sharing profits equally. Their fixed capitals were ₹2,00,000 and ₹3,00,000 respectively. Interest on capital as provided under partnership deed @10% p.a was omitted. Select the correct option from the following:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → A capital account will be debited by ₹5,000
An omission is corrected by a single adjusting entry. Each partner is credited with what he should have received (interest on capital) and debited with what he should have given up (the same total taken out of the profit already shared). Only the net figure is passed.
Interest on capital at 10% that should have been credited:
A = ₹2,00,000 × 10% = ₹20,000
B = ₹3,00,000 × 10% = ₹30,000
Total = ₹50,000
The same ₹50,000 would have reduced the profit shared equally:
A’s share = ₹25,000; B’s share = ₹25,000
Net effect:
A = ₹20,000 credit − ₹25,000 debit = ₹5,000 debit
B = ₹30,000 credit − ₹25,000 debit = ₹5,000 credit
So A’s account is debited and B’s account credited with ₹5,000. Since the capitals here are fixed, the entry would in practice be passed through the partners’ current accounts; the options call it the capital account.
NCERT (2026-27 edition):
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