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Interest on B's drawings should have been ₹7000 but only ₹3000 was charged. A and B share profits in the ratio 2:3. What is the net correction?

Answer and explanation

Correct answer: Debit B ₹1600 and credit A ₹1600

Additional interest of ₹4000 is recoverable from B but B gets back three fifth through increased profit. Net burden is ₹1600.

Related tags

PartnershipPast AdjustmentUndercharged Drawings InterestAdjustmentsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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