Amrinder, Mahinder and Joginder are partners in a firm. Mahinder retires from the firm. On his date of retirement, Rs. 60,000 becomes due to him. Amrinder and joginder promise to pay him in instalments every year at the end of the year. Prepare Mahinder's Loan Account in the following cases:
1. When payment is made four yearly instalments plus interest `@ 12%` p.a. on the unpaid balance.

Explanation

(a) When payment is made in four yearly instalments plus interest


(b) When payment is made in three yearly instalments of Rs. 20,000 each including interest.
(c ) When payment is made in four equal yearly instalments including interest `@ 12%` (Annually).

Note: The annual instalment of payment in 4 years `@ 12%` interest works out at Rs. 19,754 (Annually of Rs. 0.329234 as per Annually Table x 60,000).
It may noted that the accounting treatment for disposal of amount due to retiring partner and deceased partner is similar with a difference that in case of death of a partner, the amount credited to him/her is transferred to his Executors’ Account and the payment has to be made to him/her. This shall be taken up later in this chapter.