Rahul and Samarth were partners sharing P & L in ratio 2 : 1. Their fixed capitals were ₹8,00,000 and ₹10,00,000 respectively for the year ended March 31, 2023, the profits of ₹6,00,000 were distributed without providing for interest on Capitals @ 10% p.a. as provided in deed.
While Passing adjustment entry, Samarth's Current A/c will be ___________ by ₹ ___________
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Credited ₹40,000
Interest on capital omitted from the distribution is corrected by one adjustment entry through the partners’ current accounts (capitals are fixed): each partner gets his interest and gives up his share of the same total in the profit sharing ratio.
Interest on capital @ 10%:
Rahul = ₹8,00,000 × 10% = ₹80,000
Samarth = ₹10,00,000 × 10% = ₹1,00,000
Total = ₹1,80,000
Charged to them in the ratio 2 : 1:
Rahul = ₹1,80,000 × 2/3 = ₹1,20,000
Samarth = ₹1,80,000 × 1/3 = ₹60,000
Net effect:
Rahul = ₹80,000 − ₹1,20,000 = −₹40,000 (debit)
Samarth = ₹1,00,000 − ₹60,000 = +₹40,000 (credit)
Samarth’s Current A/c is credited by ₹40,000 (Rahul’s Current A/c Dr. ₹40,000, To Samarth’s Current A/c ₹40,000).
NCERT (2026-27 edition):
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