Ramesh, Umesh and Suresh 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 Ramesh, Umesh and Suresh during the year ending March 31, 2025 amounted to Rs. 20,000, Rs. 15,000 and Rs. 10,000 respectively. After the final accounts have been prepared, it was discovered that interest on drawings has not been taken into consideration. Which capital account should be credited in the adjustment entry ?

Ramesh's Capital A/c

Correct answer: Option (1) → Ramesh's Capital A/c

Concept: A past adjustment charges interest on drawings to each partner (debit) and redistributes that total as profit in the profit-sharing ratio (credit); the net effect decides who is finally debited or credited – per Accounting for Partnership: Basic Concepts.

Interest on drawings @10%: Ramesh 2,000, Umesh 1,500, Suresh 1,000; total = Rs 4,500 (to be charged, i.e. debited to each).
This Rs 4,500 is then redistributed in 5:3:2: Ramesh 2,250, Umesh 1,350, Suresh 900 (credited).
Net – Ramesh: 2,250 – 2,000 = +250 (credit); Umesh: 1,350 – 1,500 = –150 (debit); Suresh: 900 – 1,000 = –100 (debit).
Only Ramesh has a net credit, so his Capital A/c is credited in the adjustment entry.