Nitin owes Baban Rs. 2,50,000 as follows:
Debt I 1,00,000
Debt II 75,000
Debt III 50,000
Debt IV 25,000
2,50,000
Nitin sends cheque for Rs. 1,00,000 stating that it shall be appropriated towards the first sum of Rs. 1,00,000. Baban shall appropriate it ____.

Towards: Debt II Rs. 75,000 and Debt IV Rs. 25,000

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Towards Debt IV Rs. 25,000, Debt III Rs. 50,000 and Debt II Rs. 25,000

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Towards Debt l to IV in ratio of 100:75:50:25 i.e. 40,000, 30,000, 20,000, 10,000 respectively

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Towards Debt I as indicated by Nitin

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Solution

The correct option is B Towards Debt I as indicated by Nitin
Section 59 of the Indian Contract Act, 1872 deals with Application of payment where debt to be discharged is indicated. When Nitin specified the exact amount which needs to be appropriated, Baban should do exactly as specified. In this case, he should appropriate the Debt I that Nitin specified.

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Debt I	1,00,000
Debt II	75,000
Debt III	50,000
Debt IV	25,000
	2,50,000

Nitin owes Baban Rs. 2,50,000 as follows:Debt I1,00,000Debt II75,000Debt III50,000Debt IV25,0002,50,000Nitin sends cheque for Rs. 1,00,000 stating that it shall be appropriated towards the first sum of Rs. 1,00,000. Baban shall appropriate it ____.

Nitin owes Baban Rs. 2,50,000 as follows:
Debt I 1,00,000
Debt II 75,000
Debt III 50,000
Debt IV 25,000
2,50,000
Nitin sends cheque for Rs. 1,00,000 stating that it shall be appropriated towards the first sum of Rs. 1,00,000. Baban shall appropriate it ____.