A Profit and Loss debit balance of ₹90,000 was written off in the capital ratio 7:8 instead of the old ratio 4:1. What was the effect on the second partner?

Correct answer: ₹30,000 more debit

The governing concept is that an accumulated Profit and Loss debit balance is an old loss and must be written off in the old profit-sharing ratio. In the correct old ratio 4:1, the second partner’s share is 1/5, so his proper debit is ₹90,000 × 1/5 = ₹18,000. The incorrect capital ratio 7:8 totals 15 parts, giving him a debit of ₹90,000 × 8/15 = ₹48,000. Therefore, the excess debit is ₹48,000 − ₹18,000 = ₹30,000. Option A is correct. The effect is not a credit, because the balance represents a loss; ₹18,000 is the correct debit rather than the additional error, and ₹30,000 less would have the wrong direction.