Question

Gupta, Jain and Singh were partners in 3 : 2 : 1. On 31st March, 2020, Gupta retired. Amount due = ₹ 4,80,000, payable in 4 equal yearly instalments + 10% interest on unpaid balance. Books close on 31st March. Prepare Gupta’s Loan Account.

Hint:

Interest is charged only on opening balance each year. Subtract principal to get next year’s balance.

Answer 1

Installment = ₹ 4,80,000 ÷ 4 = ₹ 1,20,000 per year

Gupta’s Loan Account

\[ \begin{array}{|c|l|r|r|} \hline \textbf{Date} & \textbf{Particulars} & \textbf{Dr (₹)} & \textbf{Cr (₹)} \\ \hline 2020\text{ Mar 31} & \text{To Balance c/d} & & 4,80,000 \\ \hline 2021\text{ Mar 31} & \text{To Bank A/c} & 1,20,000 & \\ & \text{To Interest A/c} & 48,000 & \\ & \text{By Balance b/d} & & 4,80,000 \\ & \text{By Balance c/d} & & 3,60,000 \\ \hline 2022\text{ Mar 31} & \text{To Bank A/c} & 1,20,000 & \\ & \text{To Interest A/c} & 36,000 & \\ & \text{By Balance b/d} & & 3,60,000 \\ & \text{By Balance c/d} & & 2,40,000 \\ \hline 2023\text{ Mar 31} & \text{To Bank A/c} & 1,20,000 & \\ & \text{To Interest A/c} & 24,000 & \\ & \text{By Balance b/d} & & 2,40,000 \\ & \text{By Balance c/d} & & 1,20,000 \\ \hline 2024\text{ Mar 31} & \text{To Bank A/c} & 1,20,000 & \\ & \text{To Interest A/c} & 12,000 & \\ & \text{By Balance b/d} & & 1,20,000 \\ \hline \end{array} \]