Question

Ankit, Bhanu and Charu are partners in a firm sharing profits and losses equally with capital of ` 2,50,000

each. On 1st October, 2019, Ankit and Bhanu gave loans of ` 2,50,000 each to the firm whereas Charu took

a loan of ` 1,00,000 from the firm on the same date. It was agreed among the partners that Charu will be

charged Interest @ 6% p.a. Interest on loan from partners was paid on 10th April, 2020. The firm closes its

books on 31st March each year.

Pass the Journal entries in the books of the firm for the year ended 31st March, 2020​

Answer 1

Answer:

Opening capital ----- no entry -- shown in the Capital A/C of each partner in the credit side as By Balancd b/d

For Loan :

Bank A/C Dr

To Ankit's Loan A/C

To Bhanu's Loan A/C

Charu's Loan A/C Dr

To Bank A/C

At year end

i. Interest on loan is to be paid by the firm on loan given by Ankit and Bhanu for the period from 1st oct 2019 to 31st march 2020.

Note : Interest on Partner's loan are given whether or not specifically mentioned in the partnership deed. Further Partnership Act provides that if there is advances or loans given by partner to partnership firm and there is no rate provided for interest then interest @6% p.a. is to be allowed.. accoringly

On making the amount due

Interest on Loan A/C Dr

To Partner's loan A/C

On making payment

Partner's loan A/C Dr

To Bank A/C

for closing interest on loan A/C

Profit and Loss A/C Dr

To Interest on Loan A/C

Ii. Interest on loan given by partnership firm to partner

Partner's loan A/C Dr

To Interest on loan A/C

Bank A/C Dr

To Partner's loan A/C

Interest on Loan A/C Dr

To Profit and Loss A/C