Question:
Gopal, Heera and Iqbal were partners in a firm sharing profits and losses equally. Iqbal died on 1st April, 2022. Final dues payable to Iqbal\u2019s executor as on the date of death amounted to \u20b9 4,00,000. Starting from 31st March, 2023, the executor was to be paid in two equal annual instalments of \u20b9 2,00,000 each, with interest @ 10% per annum. Accounts were closed on 31st March every year.
Prepare Iqbal\u2019s executor\u2019s account till the final payment is made.
Gopal, Heera and Iqbal were partners in a firm sharing profits and losses equally. Iqbal died on 1st April, 2022. Final dues payable to Iqbal\u2019s executor as on the date of death amounted to \u20b9 4,00,000. Starting from 31st March, 2023, the executor was to be paid in two equal annual instalments of \u20b9 2,00,000 each, with interest @ 10% per annum. Accounts were closed on 31st March every year.
Prepare Iqbal\u2019s executor\u2019s account till the final payment is made.
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When paying executors in instalments, calculate yearly interest on the opening balance and add it before recording the payment.
Updated On: Jul 7, 2025
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Solution and Explanation
Step 1: Basic Data
Total amount due on 1st April, 2022 = ₹4,00,000
To be paid in 2 equal annual instalments of ₹2,00,000 each
Interest @ 10% per annum to be paid on outstanding balance
Step 2: Interest and Payment Schedule
31st March, 2023:
Interest = 10% of ₹4,00,000 = ₹40,000
Total due = ₹4,00,000 + ₹40,000 = ₹4,40,000
Payment made = ₹2,00,000 (1st instalment)
Balance carried forward = ₹2,40,000
31st March, 2024:
Interest = 10% of ₹2,40,000 = ₹24,000
Total due = ₹2,40,000 + ₹24,000 = ₹2,64,000
Payment made = ₹2,00,000 (2nd instalment)
Balance carried forward = ₹64,000
31st March, 2025:
Interest = 10% of ₹64,000 = ₹6,400
Final Payment = ₹64,000 + ₹6,400 = ₹70,400
Iqbal's Executor Account
| Date | Particulars | Amount (₹) | Date | Particulars | Amount (₹) |
|---|---|---|---|---|---|
| 2022 Apr 1 | To Balance b/d | 4,00,000 | 2023 Mar 31 | By Bank A/c (1st instalment) | 2,00,000 |
| 2023 Mar 31 | To Interest A/c | 40,000 | 2023 Mar 31 | By Balance c/d | 2,40,000 |
| 2023 Apr 1 | To Balance b/d | 2,40,000 | 2024 Mar 31 | By Bank A/c (2nd instalment) | 2,00,000 |
| 2024 Mar 31 | To Interest A/c | 24,000 | 2024 Mar 31 | By Balance c/d | 64,000 |
| 2024 Apr 1 | To Balance b/d | 64,000 | 2025 Mar 31 | By Bank A/c (final payment) | 70,400 |
| 2025 Mar 31 | To Interest A/c | 6,400 | |||
| Total | 7,74,400 | Total | 7,74,400 | ||
Final Answer: Iqbal's executor received a total of ₹7,74,400 including ₹74,400 as interest over 3 years.
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