Partner's Loan Account

The governing concept is that interest on a partner’s loan is an expense of the firm and also an amount payable to the partner. Therefore, it must be added to the outstanding loan balance. If the interest is omitted, the loan account will show less than the amount actually owed. Consequently, total liabilities are understated, and the related interest expense may also be omitted from the profit calculation. Option A is correct because the recorded liability is lower than the true liability. Option B would apply only if interest were recorded twice or at an excessive amount. Options C and D are unrelated because omission of loan interest does not directly reduce assets or increase sales.

Transfer to loan account means the amount is still payable. Exam tip: do not treat transfer as final payment.

Transfer to loan account does not change the number of remaining partners. Exam tip: separate accounting effect from number of partners.

Normal sales are not related to the loan account. Exam tip: include only amount due, interest, and payment.

Money goes out of bank on payment, so Bank Account is credited. Exam tip: credit bank when payment is made through bank.

Three months is one-fourth of a year, so interest is one and a half percent of ₹24000. Exam tip: remember the one-fourth year factor.

When a loan and its interest are both payable, the total settlement amount is the sum of the principal loan and the interest due. The loan is ₹60,000 and the separate interest amount is ₹900. No subtraction is required because interest is an additional charge for using the money; it is added to the amount that must be paid.

The calculation is ₹60,000 + ₹900 = ₹60,900. Therefore option A is correct. Option B includes only the loan and leaves out the interest. Option D includes only the interest, while option C subtracts the interest from the loan and gives an amount that is not the stated payable total. The question gives all required figures directly, so no rate or time calculation is needed.

The governing rule is that subsequent interest is calculated on the amount remaining unpaid after any immediate settlement. The total amount due is ₹70,000, and the firm pays ₹10,000 at once. Thus the outstanding loan is calculated as ₹70,000 − ₹10,000 = ₹60,000. Interest payable later will therefore be based on ₹60,000, subject to the rate and period stated in the agreement. Option A is correct. Option B ignores the immediate payment, option C is the amount already paid rather than the amount outstanding, and option D incorrectly adds the payment to the original liability. The distinction between total due and unpaid balance is essential.

Direct answer: option A, interest due. A retiring partner’s final entitlement may remain unpaid for a period. If the agreement provides interest on the unpaid loan, that interest must be added before determining the closing loan balance. Step 1: find the amount already transferred to the loan. Step 2: calculate interest for the outstanding time. Step 3: add the due interest to the loan balance. Option A is correct because interest increases the amount owed. Option B, normal sales, is revenue from trading and does not directly increase the partner’s loan. Option C, purchases of goods, is a trading expense or inventory matter, not a loan adjustment. Option D, customer discount, affects sales collection and is unrelated to the partner’s balance. The supplied answer is consistent. Memory cue: before balancing a partner loan, check unpaid interest.

To close the account, the full outstanding balance must be paid. Exam tip: after final payment, make the balance zero.

Capital account shows rights up to retirement and loan account shows the unpaid amount payable. Exam tip: classify both separately.

After retirement, the unpaid amount is no longer partnership capital but a payable loan. Exam tip: treat it like a creditor.

The governing concept is time-based accrual of interest. A partner’s loan normally carries interest for the period during which the firm uses the unpaid money. The payment date identifies when the outstanding balance, or a part of it, ceases to be payable and therefore fixes the period for which interest must be calculated. For example, if an amount remains unpaid for six months, interest is computed for six months; payment then stops further interest on that portion, unless the agreement provides otherwise. Option A is correct. The partner’s name, firm address and selling price are not determined by the loan payment date.

The governing accounting principle is that an amount credited to the partner’s loan account becomes part of the firm’s obligation. Suppose the opening loan is ₹100,000 and accrued interest is ₹8,000. After the interest entry, the payable balance becomes ₹108,000. If payment follows immediately and no partial-payment condition is specified, the payment is made against this updated balance, not merely against ₹100,000. Therefore option A is correct. Option B ignores the valid interest entry. Options C and D refer to unrelated balances and cannot determine the amount payable to the retiring partner. The sequence of entries matters because interest is included before settlement.

Interest is ₹1080, so the new balance will be ₹19080. Exam tip: add interest to find the new balance.

Payment should normally be up to the loan and interest due. Exam tip: recheck calculation if overpayment appears.

After retirement, the unpaid balance of the capital account is transferred to loan account. Exam tip: first check the final capital balance.

The unpaid capital becomes a liability and is credited to the loan account. Exam tip: identify the source of opening credit.

After deducting the instalment, ₹30000 remains. Exam tip: put instalment on the debit side of the loan account.

Because of the clear agreement, no interest will be allowed. Exam tip: follow the agreement before the general rule.

A retiring partner’s unpaid balance is converted into a loan payable by the firm. Any amount still outstanding after a payment continues to represent an obligation, so it is shown on the liabilities side of the balance sheet. It is not an asset, sales item, purchase item, or revenue. Payment reduces the loan liability; it does not change its liability nature.

The base of the loan account is the unpaid amount due to the retiring partner. Exam tip: first find amount due, then apply payment and interest.

Interest increases liability, so it is added on the credit side. Exam tip: do not debit interest like payment.

To reduce loan, Loan Account is debited and Bank Account is credited. Exam tip: remember the payment entry separately.

This account shows the settlement of the retiring partner systematically. Exam tip: remember its three parts: amount due, interest, and payment.