Explanation:

- The fixed capitals of Amit and Balan are Rs 2,00,000 and Rs 1,00,000, respectively.

- Interest was wrongly provided at 12% instead of the correct 10%.

- Correct interest for Amit should be Rs 20,000 (10% of Rs 2,00,000), but was given Rs 24,000.

- Correct interest for Balan should be Rs 10,000 (10% of Rs 1,00,000), but was given Rs 12,000.

- Excess interest provided to Amit: Rs 4,000,   Excess interest provided to Balan: Rs 2,000.

- Total excess interest: Rs 6,000 (4,000 +2,000)

- This excess needs adjusting back to their profit-sharing ratio (7:3).

- Amit’s share: 7/10 of Rs 6,000 = Rs 4,200.

- Balan’s share: 3/10 of Rs 6,000 = Rs 1,800.

- Adjustment entry needed:

Amit’s account is credited with Rs 200 ( 4,200 - 4,000)

Balan’s account is debited with Rs 200. (2,000 - 1,800)

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