Ram and Shyam are equal partners. Their capitals as on April 01, 2025 were Rs. 50,000 and Rs. 1,00,000 respectively. After the accounts for the financial year ending March 31, 2026 have been prepared, it is discovered that interest at the rate of 6 per cent per annum, as provided in the partnership deed has not been credited to the partners' capital accounts.
Choose the correct adjusting entry from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Ram’s Capital A/c Dr. 1,500, To Shyam’s Capital A/c 1,500
When interest on capital is left out, the whole profit has already gone to the partners in their profit sharing ratio. The adjustment is the difference between what each partner should have got and what he actually got, passed directly through the capital accounts.
Interest that should have been credited at 6%:
Ram = Rs. 50,000 × 6% = Rs. 3,000 (Cr.)
Shyam = Rs. 1,00,000 × 6% = Rs. 6,000 (Cr.)
Total = Rs. 9,000
That Rs. 9,000 was instead shared as profit equally, so it must be taken back from each partner:
Ram = Rs. 4,500 (Dr.)
Shyam = Rs. 4,500 (Dr.)
Net effect:
Ram = Rs. 3,000 − Rs. 4,500 = Rs. 1,500 excess received, so his capital is debited
Shyam = Rs. 6,000 − Rs. 4,500 = Rs. 1,500 short, so his capital is credited
Entry: Ram’s Capital A/c Dr. 1,500, To Shyam’s Capital A/c 1,500. The partner with the smaller capital loses, because the interest he missed is less than his half of the profit given back.
Note: This question is from NCERT (2026-27). NTA sets numerical questions from NCERT too, so do not ignore NCERT while practising numericals.
NCERT (2026-27 edition):
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