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Question

X, Y and Z were in partnership sharing profits and losses equally. 'Y' retires from the firm. After adjustments, his Capital Account shows a credit balance of ₹ 3,00,000 as on 1st April, 2016. Balance due to 'Y' is to be paid in three equal annual instalments along with interest @ 10% p.a. Prepare Y's Loan Account until he is paid the amount due to him. The firm closes its books on 31st March every year.

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Solution

Dr.

Y’s Loan A/c

Cr.

Date

Particulars

Amount

()

Date

Particulars

Amount

()

2017

2016

March 31

To Bank A/c (1,00,000 + 30,000)

1,30,000

April 01 By Y’s Capital A/c

3,00,000

March 31

To balance c/d

2,00,000

2017

March 31 By Interest on Loan A/c

30,000

(3,00,000 × 10/100)

3,30,000

3,30,000

2018

2017

March 31

To Bank A/c (1,00,000 + 20,000)

1,20,000

April 01 By balance b/d

2,00,000

March 31

To balance c/d

1,00,000

2018

March 31 By Interest on Loan A/c

20,000

(2,00,000 × 10/100)

2,20,000

2,20,000

2019

2018

March 31

To Bank A/c (1,00,000 + 10,000)

1,10,000

April 01 By balance b/d

1,00,000

2019

March 31 By Interest on Loan A/c

10,000

(1,00,000 × 10/100)

1,10,000

1,10,000

Working Notes: Amount payable per Installment = ₹ (3,00,000/3) = 1,00,000


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