Rakesh retired from the firm. The amount due to him was determined at ₹ 90,000. It was decided to pay the due amount as follows:
On the date of retirement − ₹ 30,000
Balance in three yearly instalments − First two instalments being of ₹ 26,000, including interest; and Balance amount as last instalment.
Interest was payable @ 10 p.a. Prepare retiring Partners' Loan Account.

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Solution

Dr.

Rakesh’s Loan A/c

Cr.

Date

Particulars

Amount

(₹)

Date

Particulars

Amount

(₹)

Year I
To Bank A/c (20,000 + 6,000)
26,000
Year I By Y’s Capital A/c
60,000

To balance c/d
40,000

By Interest on Loan A/c
6,000

(60,000 × 10/100)

66,000

66,000

Year II
To Bank A/c (22,000 + 4,000)
26,000
Year II By balance b/d
40,000

To balance c/d
18,000

By Interest on Loan A/c
4,000

(40,000 × 10/100)

44,000

44,000

Year III
To Bank A/c (18,000 + 1,800)
19,800
Year III By balance b/d
18,000

By Interest on Loan A/c
1,800

(18,000 × 10/100)

19,800

19,800

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Dr.	Rakesh’s Loan A/c						Cr.
Date		Particulars	Amount (₹)	Date	Particulars	Amount (₹)
Year I		To Bank A/c (20,000 + 6,000)	26,000	Year I	By Y’s Capital A/c	60,000
		To balance c/d	40,000
					By Interest on Loan A/c	6,000
					(60,000 × 10/100)
			66,000			66,000

Year II		To Bank A/c (22,000 + 4,000)	26,000	Year II	By balance b/d	40,000
		To balance c/d	18,000
					By Interest on Loan A/c	4,000
					(40,000 × 10/100)
			44,000			44,000

Year III		To Bank A/c (18,000 + 1,800)	19,800	Year III	By balance b/d	18,000

					By Interest on Loan A/c	1,800
					(18,000 × 10/100)
			19,800			19,800