You pay Rs 54,000, via cheque as an installment of the Rs 8,00,000 loan acquired from bank. Of this amount, Rs 50,000 is applied to the principal, and Rs 4,000 is applied to the loan interest. Which of the following is correct?

Cash account & Interest account shall be debited

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Bank account & Loan account shall be debited

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Loan account & Interest account shall be debited

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None of the above

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Solution

The correct option is C
Loan account & Interest account shall be debited

The correct entry shall be:
Loan A/c Dr Rs 50,000
Interest A/c Dr Rs 4,000
To Bank A/c Rs 54,000

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You pay Rs 54,000, via cheque as an installment of the Rs 8,00,000 loan acquired from bank. Of this amount, Rs 50,000 is applied to the principal, and Rs 4,000 is applied to the loan interest. Which of the following is correct?

The correct option is C Loan account & Interest account shall be debited The correct entry shall be: Loan A/c Dr Rs 50,000 Interest A/c Dr Rs 4,000 To Bank A/c Rs 54,000

The correct option is C
Loan account & Interest account shall be debited

The correct entry shall be:
Loan A/c Dr Rs 50,000
Interest A/c Dr Rs 4,000
To Bank A/c Rs 54,000