A and B are partners in a firm with their fixed capital ₹4,00,000 and ₹5,00,000 respectively. After preparation of accounts, it was found that interest on capital @ 10% p.a as provided by the partnership deed is omitted. In order to rectify the mistake, A's current account will be..........?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Debited by Rs 5,000
An omission found after the accounts are closed is put right by one adjustment entry through the partners’ current accounts. Each partner is credited with the interest on capital he should have got and debited with the same total taken back in the profit sharing ratio, because that amount was wrongly distributed as profit. The question gives no profit sharing ratio, so profits are shared equally.
Interest on A’s capital = Rs. 4,00,000 × 10% = Rs. 40,000
Interest on B’s capital = Rs. 5,00,000 × 10% = Rs. 50,000
Total interest = Rs. 90,000, taken back equally = Rs. 45,000 each
A: credit Rs. 40,000 − debit Rs. 45,000 = net debit Rs. 5,000
B: credit Rs. 50,000 − debit Rs. 45,000 = net credit Rs. 5,000
So A’s current account is debited by Rs. 5,000 (B’s Current A/c is credited with the same amount).
NCERT (2026-27 edition):
|
