Profit and Loss debit balance ₹72,000 was written off in capital ratio 5:4 instead of old ratio 3:1. What was the effect on the second partner?

Correct answer: ₹14,000 more debit

The governing rule is that an accumulated Profit and Loss debit balance, being an old loss, must be written off among the old partners in their old profit-sharing ratio. In the correct old ratio 3:1, the second partner’s share is 1/4 × ₹72,000 = ₹18,000 debit. Because the capital ratio 5:4 was used incorrectly, his recorded debit became 4/9 × ₹72,000 = ₹32,000. The excess debit is therefore ₹32,000 − ₹18,000 = ₹14,000. Option A is correct. The effect cannot be a credit because the balance is a loss; ₹18,000 is the correct debit, not the error; and there is a difference because the two ratios are unequal.