Adjustments

The governing concept is calculation of interest on a partner’s capital. Interest is found by applying the stated annual rate to the capital amount, assuming the full amount is applicable for the relevant period. The calculation is: interest = capital × rate = Rs 120,000 × 8/100 = Rs 9,600. Therefore the adjustment amount for interest on capital is Rs 9,600. Rs 12,000 would correspond to a 10% rate, Rs 8,000 is not the result of applying 8% to Rs 120,000, and Rs 15,000 is also unsupported by the given data. Since no period other than the standard full period is specified, option A is the only valid answer.

Drawing at the beginning of the year carries interest for the full year. Ten percent of Rs 18000 is Rs 1800.

Under fixed capital method normal adjustments go to current account. Interest on capital is payable to partner so current account is credited.

Under fluctuating capital method partner adjustments are recorded in capital account. Interest on drawings is recoverable from partner so capital account is debited.

Salary and interest on capital are both payable to the partner. Therefore total credit in As account will be Rs 15500.

In a partner’s capital or current account, drawings are recorded on the debit side because they reduce the amount due to the partner. Interest on drawings is also charged to that partner, so it is debited in the same account. Thus, both amounts must be included when finding the total debit. The word “total” means that the two separate debit items have to be added, not compared or subtracted.

Drawings = Rs 22,000 and interest on drawings = Rs 1,800. Therefore, total debit = Rs 22,000 + Rs 1,800 = Rs 23,800. Hence option A is correct. Option C includes only the drawings and ignores the interest, while option D includes only the interest. Option B would result from subtraction and has no accounting basis here.

Partner commission is allowed only when the deed provides it. If deed is silent it is not deducted from profit.

Interest on drawings is added and interest on capital is deducted from net profit. Rs 110000 plus Rs 4000 minus Rs 26000 equals Rs 88000.

Total parts = 4 + 1 = 5. B's share = 1/5 of the remaining profit. So B's share = Rs 75,000 ÷ 5 = Rs 15,000. Option B (Rs 60,000) would be 4/5 (A's share), option C (Rs 37,500) is half the profit and option D (Rs 75,000) is the entire profit — none match B's 1-part share. Exam tip: always add ratio terms to get total parts, then divide the total profit by that number to find one part.

Total parts = 2+3+5 = 10. C has 5 parts, so C's share = (5/10) × Rs 120000 = Rs 60000. The closest distractor Rs 36000 is wrong because that equals (3/10) × Rs 120000 — B's share, not C's. Exam tip: always add the ratio parts first, then multiply the partner's fraction by the total profit to get the correct share.

Goods taken by a partner for personal use are drawings. The correct double entry is: Debit — A's Drawings account; Credit — Purchases or Stock/Inventory account (depending on recording practice). Therefore the proper adjustment is to debit A's account as drawings. Option B (credit as salary) is incorrect because partner's salary is an appropriation/adjustment of profit and is not recorded by crediting the partner as "salary" in this context. Options C and D are irrelevant since withdrawals reduce partner's capital/drawings and do not directly debit firm income or credit reserves. Exam tip: Always treat goods withdrawn for personal use as drawings — debit the drawings account and credit Purchases or Inventory accordingly so the profit calculation remains correct.

A received Rs 45000 under equal sharing. Correct share is Rs 60000 so A should receive Rs 15000 more.

B received Rs 40000 under equal sharing. Correct share was Rs 20000 so B received Rs 20000 excess.

Deficiency is the difference between minimum profit and normal share. Rs 32000 minus Rs 27000 equals Rs 5000.

Bs normal share is Rs 40000 and deficiency is Rs 5000. A bears the deficiency from his Rs 40000 share so A gets Rs 35000.

The governing concept is the distinction between a charge against profit and an appropriation of profit. Interest on a partner’s loan is normally a charge against the firm’s profit when it is payable under the deed or applicable law. It must therefore be deducted while determining the firm’s true profit, before that profit is transferred to the Profit and Loss Appropriation Account. If Rs 7,500 was omitted, the correction is to reduce the stated net profit by Rs 7,500; the amount available for appropriation consequently falls by the same amount. Adding it, crediting it as an appropriation, or distributing it among partners would apply the wrong treatment. Hence option A is correct.

Interest on loan is an expense before profit while interest on capital is profit appropriation. Both must be kept separate.

For monthly drawings in the middle average period is six months. Interest on Rs 36000 at twelve percent for six months is Rs 2160.

For quarterly drawings at the end average period is four and half months. Interest on Rs 20000 at eight percent is Rs 600.

Interest is on Rs 50000 for full year and Rs 20000 for eight months. Total interest is about Rs 6333.

Interest is on Rs 70000 for first six months and Rs 40000 for next six months. Total is Rs 3500 plus Rs 2000 equal to Rs 5500.

Commission is credit and opening debit plus interest on drawings are total Rs 2500 debit. Difference is Rs 4000 credit.

Profit and salary are added and drawings are deducted. Rs 90000 plus Rs 35000 minus Rs 18000 equals Rs 107000.

Drawings should have been debited but were credited. The difference between correct and wrong balance is double which is Rs 24000.

Debiting instead of correct credit creates a double difference. Therefore partners balance is understated by Rs 14000.