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IV In case the partners’ capital(s) is (are) surplus (excess) of the required
capital, then such partner(s) may withdraw surplus or excess capital.

V Any shortage or surplus of Capital can be adjusted through Current
Accounts.

VI Accounting Treatment: For Adjusting Shortage of Capital

i.) If the existing capital of any partner is less then his newly calculated
capital:-

Bank A/c Dr.

To Old Partner’s Capital A/c.
OR

Partner’s Current a/c. Dr.
To Old Partner’s Capital A/c.

ii) If the existing capital of any partner is more than his newly calculated
capital :

Old Partner’s Capital A/c. Dr.

To Bank A/c.

OR

Old Partner’s Capital A/c. Dr.
To Partner’s Current A/c.

The adjustment can be done on the basis of old partners.

The total capital o the firm is to be valued, then the new partners share is to
be multiplied, and then his share of capital will be considered