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The loan account of a retiring partner has a balance of ₹1,20,000. At the end of the year, 5% interest is added before making a payment of ₹50,000. What amount will remain in the loan account after the payment?

Answer and explanation

Correct answer: ₹76,000

Interest on the loan = ₹1,20,000 × 5/100 = ₹6,000. Therefore, the loan balance before payment becomes ₹1,20,000 + ₹6,000 = ₹1,26,000. After paying ₹50,000, the remaining balance is ₹1,26,000 − ₹50,000 = ₹76,000. Hence, option A is correct. Option D is the balance after adding interest but before making the payment. Exam tip: Add the interest to the loan balance first, and then subtract the payment.

Related tags

Partners-LoanInterest-CalculationRetirement-Of-PartnerLoan-BalancePartner's Loan AccountPartner S Loan AccountReconstitution Retirement Or Death Of A PartnerAccountancy

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