question_answer

P, Q and R are partners in a firm. P retires on 1st January, 2014. On the date of retirement, Rs. 1,00,000 is due to him in all. It is agreed to pay this amount in instalments every year at the end of the year. Prepare P's loan A/c if three instalments of Rs. 30,000 including interest @ 10% p.a on the outstanding balance and the balance including interest in the fourth year is paid.

Answer:

Dr                                                         P's Loan Account                                                                     Cr

Date	Particulars	Amt (Rs.)	Date	Particulars	Amt (Rs.)
2014			2014
Dec 31	To Bank A/c	30,000	Jan 1	By P?s Capital A/c	1,00,000
Dec 31	To Balance c/d	80,000	Dec 31	By Interest on Rs. 1,00,000 @ 10%	10,000
		1,10,000			1,10,000
2015			2015
Dec 31	To Bank A/c	30,000	Jan 1	By Balance b/d	80,000
Dec 31	To Balance b/d	58,000	Dec 31	By Interest on Rs. 80,000 @ 10%	8,000
		88,000			88,000
2016			2016
Dec 31	To Bank A/c	30,000	Jan 1	By Balance b/d	58,000
Dec 31	To Balance c/d	33,800	Dec 31	By Interest on Rs. 58,000 @ 10%	5,800
		63,800			63,800
2017			2017
Dec 31	To Bank A/c	37,180	Jan 1	By Balance b/d	33,800
			Dec 31	By Interest on Rs. 33,800 @ 10%	3,380
		37,180			37,180