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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Akhil, Sunil and Parvesh are partners sharing profits in the ratio of 3 : 2 : 1. The opening balance of Loan by Sunil Account was ₹3,00,000. Interest was agreed to be paid @ 10% p.a. Interest was paid by cheque up to February, 2025 on 1st March, 2025 and the balance was yet to be paid. Pass the Journal entries for interest on the loan by the partner.
JOURNAL
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2025 Mar 1 | Interest on Sunil’s Loan A/c Dr. | 27,500 | ||
| To Bank A/c | 27,500 | |||
| (Interest on loan paid by cheque for 11 months, i.e. up to February, 2025) | ||||
| 2025 Mar 31 | Interest on Sunil’s Loan A/c Dr. | 2,500 | ||
| To Sunil’s Loan A/c | 2,500 | |||
| (Interest for March, 2025 due but not yet paid, credited to the loan account) | ||||
| 2025 Mar 31 | Profit & Loss A/c Dr. | 30,000 | ||
| To Interest on Sunil’s Loan A/c | 30,000 | |||
| (Interest on loan transferred to the debit of Profit & Loss Account) |
Working Notes:
Total interest on loan for the year = ₹3,00,000 × 10/100 = ₹30,000.
Interest paid by cheque for 11 months (April 2024 to February 2025) = ₹3,00,000 × 10/100 × 11/12 = ₹27,500.
Interest for March, 2025 still outstanding = ₹30,000 – ₹27,500 = ₹2,500.
Note: Interest on a partner’s loan is a charge against profit, so it is debited to the Profit & Loss Account (not the Appropriation Account).
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Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Chapter 1 Q.8 - Accounting for Partnership Firm Fundamentals", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 1 - Accounting for Partnership Firm – Fundamentals.
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