Question

Ananya and Mukti are partners in a firm. On 1st April, 2023 their fixed Capitals were ₹ 6,00,000 and ₹ 4,00,000 respectively. On Ist January, 2024, Ananya granted a loan of ₹ 2,00,000 to the firm. Mukti had allowed the firm to use her property for business for a monthly rent of ₹ 15,000. The partnership deed provides that interest on capital will be allowed @ 8% p.a. and Mukti is to be allowed a salary of ₹ 10,000 per month. The firm earned a profit of ₹ 63,000 for the year ended 31st March 2024 before any of the above adjustment is made.

Based on the above information you are required to answer the following question:

Interest on Ananya's Loan will be recorded in ______.

Options

• Ananya's Current Account

• Ananya's Capital Account

• Ananya's Loan Account

• Profit & Loss Appropriation Account

Answer 1

Interest on Ananya's Loan will be recorded in Ananya's Loan Account.

Explanation:

Interest on a partner's loan is credited to the Partner's Loan Account, as it is a liability of the firm.