When capitals are made proportionate to profit-sharing ratio and excess capital is paid back to a partner is his Capital Account debited or credited?

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Solution

When capitals are made proportionate to their profit sharing ratios, it is agreed that the capitals contributed by each partner should be equal to his share in profit. Any partner having excess capital, after such adjustment, withdraws the excess capital. Hence, the partner's capital account is debited with the amount of withdrawal.

The accounting entry is:
Partner's capital a/c... Dr.
To Cash a/c

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