If A and B should receive Rs 12,000 and Rs 8,000 respectively but both received Rs 10,000, what is the final adjustment?

Correct answer: Debit B Rs 2,000 and credit A Rs 2,000

The governing principle is that a correction entry must transfer the excess received by one partner to the partner who received less, without changing the total amount distributed. A should receive Rs 12,000 but received only Rs 10,000, so A is short by Rs 2,000 and must be credited by that amount. B should receive Rs 8,000 but received Rs 10,000, so B received an excess of Rs 2,000 and must be debited by that amount. The adjustment is therefore B's Capital or Current Account Dr. Rs 2,000, to A's Capital or Current Account Rs 2,000. Option A reverses the direction, while debiting or crediting both partners would not correct the relative difference.