Q.M and N are partners maintaining their capitals under the FLUCTUATING capital method, with opening capitals of ₹1,00,000 (M) and ₹80,000 (N). Interest on capital is allowed at 10% per annum. N is entitled to a salary of ₹8,000. Shares of profit for the year are M ₹36,000 and N ₹24,000. During the year, M withdrew ₹15,000 (interest on drawings ₹600) and N withdrew ₹10,000 (interest on drawings ₹400). Prepare the partners' Capital Accounts.

Under the fluctuating method, every item is posted directly into ONE Capital Account per partner, so its closing balance genuinely changes from the opening figure.

M: ₹1,00,000 + ₹10,000 (interest) + ₹36,000 (share) − ₹15,000 (drawings) − ₹600 (interest on drawings) = ₹1,30,400. N: ₹80,000 + ₹8,000 (interest) + ₹8,000 (salary) + ₹24,000 (share) − ₹10,000 (drawings) − ₹400 (interest on drawings) = ₹1,09,600.

Step 1 — Interest on capital. M: ₹1,00,000 × 10% = ₹10,000. N: ₹80,000 × 10% = ₹8,000.

Step 2 — Build up each partner's single Capital Account.

Capital Accounts (Fluctuating)

Step 3 — Cross-check (dual solve), M. Debit total: 15,000 + 600 + 1,30,400 = 1,46,000. Credit total: 1,00,000 + 10,000 + 36,000 = 1,46,000. They match.

Step 4 — Cross-check (dual solve), N. Debit total: 10,000 + 400 + 1,09,600 = 1,20,000. Credit total: 80,000 + 8,000 + 8,000 + 24,000 = 1,20,000. They match.

Students sometimes open a separate Current Account under the fluctuating method out of habit carried over from the fixed method — under fluctuating capital, there is NO separate Current Account at all; everything is posted into the single Capital Account.