Double Entry Book Keeping - Interest on Loans and Partner Adjustments

Flashcards covering the accounting treatment of interest on loans to/from partners and rent adjustments based on the CBSE XII Double Entry Book Keeping curriculum.

Interest on Loan by Partner (No Agreement)

In the absence of an agreement, the partner is entitled to interest at the rate of $6\%$ p.a. on the loan given to the firm.

Interest on Loan to Partner (No Agreement)

In the absence of an agreement, the firm will not charge any interest on the loan given to the partner.

Rent paid to Partner

A charge against profits for the use of a partner's personal property (e.g., a godown) by the firm, typically paid as per a monthly or agreed rate.

Akhil's Loan Interest (Problem 9)

Interest of $1,500$ calculated on a loan of $1,00,000$ given on 1st January, 2025, for the year ending 31st March, 2025 at $6\%$ p.a.

Net Distributable Profit (Problem 9)

The amount of $41,500$ derived from a total profit of $1,03,000$ after deducting $1,500$ for loan interest and $60,000$ for rent.

Interest on Loan to Pawan (Problem 10)

Interest charged at $10\%$ p.a. on a loan of $₹5,00,000$ given on 1st April, 2024.

Interest on Loan from Nirmal (Problem 10)

Interest calculation for a loan of $₹2,00,000$ taken by the firm on 1st December, 2024.

Interest on Loans by Ankit and Bhanu (Problem 11)

Interest of $7,500$ credited to each partner's Loan Account for loans of $2,50,000$ given on 1st October, 2024.

Interest on Loan to Charu (Problem 11)

Amount of $2,500$ debited to the partner's Capital Account for a loan of $₹1,00,000$ taken on 1st November, 2024, at $6\%$ p.a.

Interest on Loan to Jetha (@ 10% p.a.)

Interest of $45,000$ calculated on a loan of $6,00,000$ for the period from 1st July, 2024, to 31st March, 2025.

Interest on Loan to Rahul (Problem 13)

Interest of $3,000$ for the month of February 2025 on a loan of $6,00,000$ at $6\%$ p.a.

Charge against Profit

An item (like interest on partner's loan or rent) that must be deductedจาก the firm's profit before transferring the balance to the Profit & Loss Appropriation Account.