Q.For the firm of A and B in the previous problem (profit-sharing ratio 3:2), prepare the Balance Sheet as at 31st March 2024, and Partners' Capital Accounts and Current Accounts under the Fixed Capital Method, using: Capitals — A ₹1,00,000, B ₹80,000; Drawings — A ₹12,000, B ₹8,000; Interest on Capital @5% p.a.; B's Salary ₹12,000; Interest on Drawings — A ₹600, B ₹400; Profit transferred — A ₹16,260, B ₹10,840.

Under the Fixed Capital Method, the Capital Accounts stay exactly as originally contributed, while every other adjustment for A and B flows through their separate Current Accounts.

Partners' Capital Accounts (Fixed Capital Method)

Since the Fixed Capital Method is used, the Capital Accounts are NOT touched by drawings, interest, salary or profit — they remain exactly as originally contributed:

Partners' Current Accounts (Fixed Capital Method)

A's Current Account: Credit side (5,000 + 16,260 = 21,260) less Debit side (12,000 + 600 = 12,600) = ₹8,660 credit balance carried down.

B's Current Account: Credit side (4,000 + 12,000 + 10,840 = 26,840) less Debit side (8,000 + 400 = 8,400) = ₹18,440 credit balance carried down.

Balance Sheet as at 31st March 2024

Prepare the Capital Accounts first (they simply carry the opening balance down, unchanged, under the Fixed Method), then the Current Accounts (which absorb every other item), and finally the Balanc …

A frequent error is recording drawings, interest, or salary directly in the Capital Account under the Fixed Capital Method — these items belong exclusively in the Current Account; the Capital Account ch …