Question : When Present Adjusted Capital (after adjustments) is less than the Proportionate Capital: choose the correct journal entry.
Option 1: Cash A/c or Bank A/c ...Dr.
To Concerned Partner's Capital A/c
Option 2: Concerned Partner's Current A/c ...Dr.
To Concerned Partner's Capital A/c
Option 3: Either 1 or 2
Option 4: None of the above
Correct Answer: Either 1 or 2
Solution : Answer = Either 1 or 2
When the Present Adjusted Capital (after adjustments) is less than the Proportionate Capital, the correct journal entry would be either:
a) Debiting Cash A/c or Bank A/c and crediting Concerned Partner's Capital A/c, or,
b) Debiting Concerned Partner's Current A/c and crediting Concerned Partner's Capital A/c.
Hence, the correct option is 3.
