Question

P, Q and R are partners in a firm. R retires from the firm. On the date of retirement, ₹ 3,00,000 is due to him. It is agreed to pay him in instalments every year at the end of the year. Prepare R’s Loan Account in the following cases:

1. Five yearly instalments plus interest @ 15% p.a.
2. Instalments of ₹ 1,00,000 which already include interest @ 15% p.a. on the outstanding balance for the first four years and the balance including interest in the fifth year.

Answer 1

(i)

Dr.	R’s Loan A/c				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
end	To Bank A/c	1,05,000	Start Ist yr	By Balance b/d	3,00,000
	To Balance b/d	2,40,000		By Interest A/c	45,000
		3,45,000			3,45,000
end	To Bank A/c	96,000	IInd yr	By Balance b/d	2,40,000
	To Balance c/d	1,80,000		By Interest A/c	36,000
		2,76,000			2,76,000
end	To Bank A/c	87,000	IIIrd yr	By Balance b/d	1,80,000
	To Balance c/d	1,20,000		By Interest A/c	27,000
		2,07,000			2,07,000
end	To Bank A/c	78,000	IVth yr	By Balance b/d	1,20,000
	To Balance c/d	60,000		By Interest A/c	18,000
		1,38,000			1,38,000
end	To Bank A/c	69,000	Vth yr	By Balance b/d	60,000
				By Interest A/c	9,000
		69,000			69,000

(ii)

Dr.	R’s Loan A/c				Cr.
Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
end	To Bank A/c	1,00,000	Start Ist yr	By Balance b/d	3,00,000
	To Balance b/d	2,45,000		By Interest A/c	45,000
		3,45,000			3,45,000
end	To Bank A/c	1,00,000	IInd yr	By Balance b/d	2,45,000
	To Balance c/d	1,81,750		By Interest A/c	36,750
		2,81,750			2,81,750
end	To Bank A/c	1,00,000	IIIrd yr	By Balance b/d	1,81,750
	To Balance c/d	1,09,013		By Interest A/c	27,263
		2,09,013			2,09,013
end	To Bank A/c	1,00,000	IVth yr	By Balance b/d	1,09,013
	To Balance c/d	25,365		By Interest A/c	16,352
		1,25,365			1,25,365
end	To Bank A/c	29,170	Vth yr	By Balance b/d	25,365
				By Interest A/c	3,805
		29,170			29,170