Partner T gave the partnership a loan of Rs. 50,000 at 8% per annum for 8 months. At the time of dissolution the loan and the accrued interest are written off. Partner T’s capital balance before adjustment is Rs. 1,20,000. What is the balance in T’s capital account after settlement?

Step-by-step solution

1. Compute the interest on the loan for 8 months: $50,000\times 8$.
2. Add the principal and interest to get total written‑off amount: $50,000+2,666.67=52,666.67$.
3. Subtract this from the original capital: $1,20,000-52,666.67=67,333.33$.
4. Round to the nearest rupee: Rs. 67,333.

Concept tested: Loan interest adjustment on dissolution

Published 4 October 2026 · How this solution was prepared and checked