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
Omitted interest on capital is put right by one adjusting entry: each partner is credited with the interest he should have received and debited with his share of the same total, which would have come out of the profits.
Interest due to A = Rs. 4,00,000 × 10% = Rs. 40,000
Interest due to B = Rs. 5,00,000 × 10% = Rs. 50,000
Total interest = Rs. 90,000
The profit sharing ratio is not given, so profits are taken as shared equally: each partner bears Rs. 45,000
A: Rs. 40,000 credited − Rs. 45,000 debited = net debit of Rs. 5,000
B, on the other hand, gets a net credit of Rs. 5,000. The capitals are fixed, so the adjustment goes through the current accounts.
NCERT (2026-27 edition):
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