A and B are partners, sharing profits equally. Their fixed capitals were Rs. 2,00,000 and Rs. 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
When interest on capital is omitted, the whole profit was shared without first crediting the interest. The correction credits each partner with his interest and takes back the same total from the partners in the profit sharing ratio. Only the net effect on each partner is passed.
Interest due: A = 10% of Rs. 2,00,000 = Rs. 20,000; B = 10% of Rs. 3,00,000 = Rs. 30,000
Total interest = Rs. 50,000, borne equally: A = Rs. 25,000, B = Rs. 25,000
A: credited Rs. 20,000, debited Rs. 25,000 = net debit Rs. 5,000
B: credited Rs. 30,000, debited Rs. 25,000 = net credit Rs. 5,000
So the adjusting entry is A’s Capital A/c Dr. Rs. 5,000, To B’s Capital A/c Rs. 5,000. B’s account is credited, not debited, and Rs. 25,000 is only each partner’s share of the total interest, not the net effect.
The NCERT exercise below has the same capitals and rate but a 3:2 ratio; with equal sharing here, A and B each bear half of the Rs. 50,000.
NCERT (2026-27 edition):
|
