Q.X and Y are partners with FIXED capitals of ₹3,00,000 and ₹2,00,000 respectively. Interest on capital is allowed at 8% per annum. X is entitled to a share of profit of ₹60,000 and Y to ₹40,000 for the year, and Y is additionally entitled to a salary of ₹15,000. During the year, X withdrew ₹40,000 and Y withdrew ₹30,000, on which interest on drawings of ₹1,000 (X) and ₹750 (Y) is chargeable. Prepare the partners' Capital Accounts and Current Accounts.

Under the fixed capital method, the Capital Accounts stay unchanged at ₹3,00,000 and ₹2,00,000; every other item (interest, salary, share of profit, drawings) goes into separate Current Accounts.

X's Current A/c: ₹24,000 (interest) + ₹60,000 (share) − ₹40,000 (drawings) − ₹1,000 (interest on drawings) = ₹43,000. Y's Current A/c: ₹16,000 (interest) + ₹15,000 (salary) + ₹40,000 (share) − ₹30,000 (drawings) − ₹750 (interest on drawings) = ₹40,250.

Step 1 — Interest on capital (8% on the FIXED capital, since it never changes during the year). X: ₹3,00,000 × 8% = ₹24,000. Y: ₹2,00,000 × 8% = ₹16,000.

Step 2 — Capital Accounts. Since no fresh capital was introduced or permanently withdrawn, both Capital Accounts stay exactly at their opening figures.

Capital Accounts

Step 3 — Current Accounts. Every routine item goes here instead.

Current Accounts

Step 4 — Cross-check (dual solve). X's debit total (40,000 + 1,000 + 43,000 = 84,000) exactly equals X's credit total (24,000 + 60,000 = 84,000). Y's debit total (30,000 + 750 + 40,250 = 71,000) exactly equals Y's credit total (16,000 + 15,000 + 40,000 = 71,000) — both accounts balance, confirming the figures are internally consistent.

A common mistake under the fixed capital method is posting interest on capital, salary, or drawings directly into the Capital Account itself — under this method the Capital Account is reserved strictly for capital introduced/withdrawn; every routine yearly item belongs in the Current Account instead.