Question

Alok, Deepak and Manish were partners sharing Profit & Loss in the ratio 5 : 3 : 2. Deepak retired on March 31, 2025. On this date his dues after all adjustments related to Revaluation Gain/Loss, Accumulated Profits/Losses and Goodwill treatment came out to be ₹ 6,40,000. He was paid ₹ 40,000 through Furniture on retirement and it was agreed to pay balance in three equal annual instalments together with interest as per the rate permissible by act, in the absence of any agreement. First instalment being paid on March 31, 2026. You are required to pass entry for immediate payment to Deepak on retirement and prepare Deepak’s Loan Account till it is finally closed.

Answer 1

Journal entries
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
March 31, 2025	Deepak’s Capital A/c   ...Dr.		6,40,000	-
	To Furniture A/c		-	40,000
	To Deepak’s Loan A/c		-	6,00,000
	(Being Deepak’s Capital account settled)

 

Dr.	Deepak’s Loan A/c				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
Mar. 31 2026	Bank A/c	2,36,000	Apr. 01, 2025	Deepak’s Capital A/c	6,00,000
Mar. 31 2026	Balance c/d	4,00,000	Mar. 31, 2026	Interest A/c	36,000
		6,36,000			6,36,000
Mar. 31 2027	Bank A/c	2,24,000	Apr.01, 2026	Balance b/d	4,00,000
Mar. 31 2027	Balance c/d	2,00,000	Mar. 31, 2027	Interest A/c	24,000
		4,24,000			4,24,000
Mar. 31 2028	Bank A/c	2,12,000	Apr. 01, 2027	Balance b/d	2,00,000
			Mar. 31, 2028	Interest A/c	12,000
		2,12,000			2,12,000