DK Goel Solutions Class 12 Accountancy Chapter 4 Retirement or Death of a Partner

A, B and C are partners sharing profit in the ratio of 6:5:4. Calculate new profit sharing ratios if (i) A retires; (ii) B retires; (iii) C retires.

A, B, C and D are partners sharing profits in the ratio of 5:3:1:2. Calculate the new profit sharing ratio if B and C retire from the firm.

X, Y and Z are partners sharing profits in the ratio of 2/3 : 1/4 : 1/12. Calculate the new ratio if X retires.

L, M and O were partners in a firm sharing profit in the ratio of 3:2:2. M retired and his share was divide equally between L and O. Calculate the new profit sharing ratio of L and O.

A, B and C are partners sharing profits in the ratio 4:3:2. B retires and his share was taken up by A and C in the ratio of 3:2. Find out the new ratio.

A, B and C are partners sharing profits in the ratio of 4:3:1. A retires and his share is taken over by B and C equally. Calculate the new ratio.

A, B and C are partners sharing profits in the ratio of 1/2 : 1/3 : 1/6. B retires and his share is taken by A and C in the ratio of 5:3. Calculate the new ratio.

X, Y and Z are partners sharing in the ratio of 2:2:1. Y retires and his share is entirely taken by X. Calculate the new ratio.

Aman, Naman and Neel were partners in a firm sharing profits in the ratio of 1:2:1. Neel retires and he surrenders 2/3rd of his share in favour of Aman and the remaining share in favour of Naman. Calculate the new profit sharing ratio of Aman and Naman.

P, Q, R and S were partners in a firm sharing profits and losses in the ratio of 4:3:2:1. On 31st March, 2022, P retired from the firm. P’s share was taken over by Q, R and S in the ratio of 1:2:3. Calculate the new profit sharing ratio of Q,R and S.

P, Q and R are in partnership sharing profits and losses as ½, 2/6 and 1/6 respectively. R retires and his share is taken by P and Q in the ratio of 2:1. Immediately, S is admitted for 1/4th share of profit, 1/3rd of which was given by P and the remaining share was taken equally from P and Q. Calculate new profit sharing ratio after S’s admission.

A, B and C were partners sharing profit in the ratio of 7:5:3. Find out the gaining ratio and new ratio when (i) A retires, (ii) B retires or (iii) C retires.

X, Y and Z share profits in the ratio of 1/2, 3/10, 1/5. Calculate the gaining ratio and new ratios when:

(i) X dies (ii) Y dies or (iii) Z dies.

P, Q, R and S were partners sharing profits in the ratio of 5:4:3:1. P and S retire from the firm. Calculate the gaining ratio and new profit sharing ratio of Q and R.

On 1st April, 2023 Ashish, Namish and Aman were partners sharing profits and losses in the ratio 2/5, 2/5 and 1/5 respectively. On this date Namish retires. The new profit sharing ratio of Ashish and Aman will be ¾ and ¼ respectively. Calculate gaining ratio.

On 1st April, 2023 A, B and C were partners sharing profits and losses in the ratio of A 5/10, B 3/10 and C 2/10 respectively. On this date B retires. The new profit sharing ratio of A and C will be A 3/5 and C 2/5. Calculate gaining ratio.

A, B and C are partners sharing profits in the ratio of ½: 1/3: 1/6. C retires and A and B decide to share future profits equally. Calculate the gaining ratio.

A, B, C and D are partners sharing profits in the ratio of 5:4:3:2. A retires and B, C and D decide to share the profits and losses equally in future. Calculate the gaining ratio.

Rekha, Ruchi and Suruchi are partners. Ruchi retires. Calculate new ratio if continuing partners acquired her share in the ratio of 2 : 3. Also mention the gaining ratio.

X, Y and Z are partners sharing profits in the ratio of 1/9: 1/3 and 5/9. Z retires and surrenders 3/4th of this share in favour of X and remaining in favour of Y. Calculate new ratio and gaining ratio.

P, Q, R and S were partners sharing profits in the ratio of 2 : 3:5:2. S retires and his share is acquired by Q and R in the ratio of 3: 2. Calculate new ratio and gaining ratio.

A and B were partners sharing profits in the ratio of 5:3. On 1st April, 2021 they admitted C as a new partner for 1/4th share which he acquired from A and B in the ratio of 3 : 2. On 1st April 2022, another new partner D was admitted for 1/6th share which he acquires 1/10 from A and 1/15 from C. On 1st April, 2023 A dies and his share was taken over by B, C and D equally.

Calculate :

(i) New profit sharing ratio of A, B and C on C's admission.

(ii) New profit sharing ratio of A, B, C and D on D's admission.

(ii) New profit sharing ratio of B, C and D on A’s death.

X, Y and Z are partners sharing profits in the ratio of 5:4:3. X retires from the firm and it is decided that new prom-sharing ratio between Y and Z will be same as existing between X and Y. Calculate new ratio and gaining ratio.

L, M and N are three partners sharing profits in the ratio of 4:3:2 respectively. M retires and the goodwill is valued at Rs. 1,08,000. No goodwill account appears as yet in the books of the firm. L and N will share profits in future in the ratio 5:3 respectively. Pass Journal Entry for goodwill.

Ashok, Rakesh and Mukesh were partners sharing profits and losses in the ratio of 2:2:1. On 1st April, 2023, their goodwill was valued at Rs. 3,00,000; there bring no account for it in the books. On this date Rakesh retired. Pass the Journal Entry to record goodwill

A, B and C are sharing profits in the ratio of 4:3:2. Goodwill is appearing In the book value of Rs. 42,000. C retires and on the day of C's retirement Goodwill Rs. 63,000. Pass the necessary journal entries.

P, Q and R are equal partners. Goodwill is appearing in their books at Rs. 4,00,000. R retire and on the day of R's retirement Goodwill is valued at Rs. 2,50.000. Pass the necessary journal entries.

A, B and C are partners sharing profits and losses in the ratio of 2:2:1. C decided to retire and on this date goodwill of the firm is valued at Rs. 2,00,000. Pass entries when goodwill account is already appearing in the books at Rs. 1,50,000.

P, R and S are in partnership sharing profits 4/8, 3/8 and 1/8 respectively. It is provided under the partnership deed that on the death of any partner his share of goodwill is to be valued at one-half of the net profits credited to his account during the last 4 completed years (books of accounts are closed on 31st March).

R died on 1st April, 2022. The firm's profits for the last 4 years were as follows: 2019 (Profits Rs. 1,20,000); 2020 (Profits Rs. 60,000); 2021 (Losses Rs. 20,000) and 2022 (Profits Rs. 80,000).

1. Determine the amount that should be credited to R in respect of his share of goodwill.

2. Pass journal entry for the adjustment of goodwill, assuming that profit sharing ratio between P and S in future will be 3 : 2. Show your working clearly.

A, B, C and D are partners in a firm sharing profits and losses in the ratio of 2:2:1:1. A and C decided to retire from the firm. The goodwill of the firm was valued at Rs. 90,000. B and D decided to share future profits in the ratio of 5:3.

Pass necessary journal entry for the treatment of goodwill.

Arjun, Bhim and Nakul are partners sharing profits and losses in the ratio of 14 : 5: 6 respectively. Bhim retires and surrenders his 5/25th share favour of Arjun. The goodwill of the firm is valued at 2 years purchase of super profits based on average profits of last 3 years. The profits for the last 3 years are Rs. 50,000, Rs. 60,000 and Rs. 55,000 respectively. The normal profits for the similar firm are Rs. 30,000. Goodwill already appears in the books of the firm at Rs. 75,000. The profit for the first year after Bhim's retirement was Rs. 1,00,000. Give the necessary journal entries to adjust Goodwill and to distribute profits showing your workings clearly.

A, B and C were partners sharing profits in the ratio of 6:4.5 Their capitals were A –Rs. 1,00,000, B –Rs. 80,000 and C –Rs. 60,000. On 1st April 2023, B retired from the firm and the new profit sharing ratio between A and C was decided as 11:4. On B's retirement the goodwill of the firm was valued at Rs. 1,80,000. Showing your calculations clearly pass necessary journal entry for the treatment of goodwill on B's retirement.

X, Y and Z were partners in a firm sharing profits in the ratio of 3:2:1. Z retired and the new profit sharing ratio between X and Y was 1 : 2. On Z's retirement the goodwill of the firm was valued at Rs. 30,000. Pass necessary journal entry for the treatment of goodwill on Z's retirement.

A, B, C and D are partners sharing profits in the ratio of 5:3:3:1. On the retirement of C, goodwill was valued at Rs. 3,60,000. C's share of goodwill will be adjusted into the capital accounts of A,B and D. Pass necessary entry for the treatment of goodwill when new profit sharing ratio is decided at 9:2:1.

X, Y and Z are partners sharing profits and losses in the ratio of 3:2:1. Y retires selling his share to X and Z for Rs. 1,60,000, Rs. 1,00,000 being paid by X and Rs. 60,000 by Z. The profit for the year after Y's retirement is Rs. 2,40,000.

Pass entries to (a) record the sale of Y's share to X and Z, and (b) distribute the profit between X and Z.

A, B and C were partners sharing profits and losses in the ratio of 5:3:2. Following was their Balance Sheet as at 31st March, 2023.

A retire on this date and the following adjustments were agreed upon:

(i) Bad Debts amounting to Rs. 10,000 were to be written off and provision for doubtful debts be maintained at existing rate.

(ii) An unrecorded creditor of Rs. 20,000 will be taken into account.

(iii) Provision is to be made for legal damages amounting to Rs. 25,000.

(iv) There is a liability for Rs. 15,000 for outstanding salaries.

(v) Sundry creditors are reduced by Rs. 8,000 being a liability not payable.

(vi) Stock be increased by Rs. 15,000 and Plant is to be reduced to Rs. 1,80,000.

Pass journal entries to give effect to above adjustments and prepare Revaluation Account.

A, B, C and D are partners sharing profits in the ratio of 1:2:3:4. D retires and his share is taken up by A and B equally. Goodwill was valued at 3 year’s purchase of average profits which were Rs. 20,000. General Reserve showed a balance of Rs. 65,000 at the time of D's retirement.

You are required to record necessary journal entries to record the above adjustments on D's retirement. You are also required to prepare his capital account to find out the amount due to him when his capital balance in the balance sheet was Rs. 1,50,000 before any adjustment. Also calculate the new profit sharing ratios.

A, B and C are partners sharing profits and losses in the ratio of 2:2:1. A retires and the new ratio between B and C is agreed at 3:2. Give journal entries on A’s retirement in the following cases :

(a) Workmen Compensation Reserve appears in the books at Rs. 1,20,000 and there is a claim of Rs. 1,50,000 against it.

(b) Investment Fluctuation Reserve appears in the books at Rs. 40,000, when Investments (market value Rs. 1,00,000) appear at Rs. 85,000.

A, B and C are partners sharing profits in the ratio of 3 : 2:1. C retires and new profit sharing ratio is agreed at 3 : 1. They also decided to record the effect of the following without affecting their book values:

       Rs.

General Reserve      1,00,000

Profit & Loss Account     45,000

Advertisement Suspense Account    25,000

You are required to pass the necessary single adjusting entry.

A, B and C are partners sharing profits in the ratio of 5: 3:2. C retires and A and B agree to share future profits in the ratio of 6:4. Goodwill is to be taken at two year's purchase of the average profits of the last 5 years which were Rs. 10,000; Rs. 25,000, Rs. 15,000 (loss); Rs. 36,000 and Rs. 44,000 respectively.

At the date of C's retirement, following balances appeared in the books of the firm:

       Rs.

General Reserve     1,20,000

Profit & Loss Account (Dr.)    30,000

C's Capital      2,00,000

You are required to record necessary journal entries in the books of the firm and prepare C’s Capital Account on his retirement.

Rohan, Riya and Priya were partners in a firm with profit sharing ratio of 4:2:1. Priya retired on 1st September, 2024. On that day, the capitals of Rohan and Riya after all adjustment were Rs. 10,50,000 and Rs. 5,50,000 respectively. Total amount payable to Priya was Rs. 4,00,000 which was not paid to her until 31st March, 2025.

The firm earned a profit of Rs. 50,000 during the period of 7 months ended on 31st March, 2025. Priya wants to exercise provisions of section 37 of Indian Partnership Act, 1932.

Which of the options available under section 37 should be opted by Priya, if amount due to her was paid on 31st March, 2025?

X, Y and Z are partners in a firm sharing profits and losses equally. The Balance Sheet of the firm as at 31st March, 2023 stood as follows:

Z retires on 1st April, 2023 subject to the following adjustments :

(i) Freehold Property be valued at Rs. 5,80,000.

(ii) Investments be valued at Rs. 47,000; and stocks be valued at Rs. 94,000.

(iii) A provision of 5% be made for doubtful debts.

(iv) Trade Marks are valueless.

(v) An item of 12,000 included in creditors is not likely to be claimed.

(vi) Goodwill be valued at one year’s purchase of the average profit of the past three years. Profits ending 31st March were: 2021 Rs. 1,20,000; 2022 Rs. 1,30,000 and 2023 Rs. 95,000.

Pass journal entries, give capital accounts and the balance sheet of the remaining partners.

P, Q and R were partners in a firm sharing profits in the ratio of 2:3:5. On 31-03-2024 their Balance Sheet was as follows:

On the above date R retired from the firm due to his illness on the following terms:

(i) Building was to be depreciated by Rs. 40,000.

(ii) Provision for doubtful debts was to be maintained at 20% on debtors.

(iii) Salary outstanding Rs. 5,000 was to be recorded and creditors Rs. 4,000 will not be claimed.

(iv) Goodwill of the firm was valued at Rs. 72,000.

(v) R was to be paid Rs. 15,000 in cash, through bank and the balance was to be transferred to his loan account.

Prepare Revaluation Account, Partner’s Capital Accounts and the Balance Sheet of P and Q after R’s retirement.

Manoj, Naveen and Deepak were partners sharing profits and losses in the ratio of 4:3:2. As at 1st April 2024, their Balance Sheet was as follows.

Deepak retired on the above date as per the following terms :

1. Goodwill of the firm was valued at Rs. 21,000.

2. Stock to be appreciated by 10%.

3. Provision for doubtful debts should be 5% on debtors.

4. Machinery is to be valued at 5% more than its book value.

5. Motor Car is revalued at Rs. 15,500. Retiring partner took over Motor Car at this value.

6. Deepak be paid Rs. 2,000 in cash and balance be transferred to his loan account.

Show necessary journal entries. Prepare Revaluation Account, Capita Account and Opening Balance Sheet of continuing partners.

Sameer, Yasmin and Saloni were partners in a firm sharing profits and losses in the ratio of 4:3:3. On 31.3.2016, their Balance Sheet was as follows:

BALANCE SHEET OF SAMEER, YASMIN AND SALONI

as at 31.3.2016

On the above date, Sameer retired and it was agreed that :

(i) Debtors of Rs. 24,000 will be written off as bad debts and a provision of 5% ondebtors for bad and doubtful debts Will be maintained.

(ii) An unrecorded creditor of Rs. 20,000 will be recorded.

(iii) Patents will be completely written off and 5% depreciation will be charged on stock, machinery and building.

(iv) Yasmin and Saloni will share future profits in the ratio of 3 : 2.

(v) Goodwill of the firm on Sameer’s retirement was valued at Rs. 5,40,000.

Pass necessary journal entries for the above transactions in the books of the firm on Sameer’s retirement.

Following is the Balance Sheet of X, Y and Z as at 31st March, 2022. They shared profits in the ratio of 3:3:2.

On 1st April, 2022 Y decided to retire from the firm on the following terms.

(a) Stock to be depreciated by Rs. 12,000.

(b) Advertisement Suspense Account to be written off.

(c) Provision for Bad and Doubtful Debts to be increased to Rs. 6,000.

(d) Fixed Assets be appreciated by 10%.

(e) Goodwill of the firm be valued at Rs. 80,000 and the amount due to the retiring partner be adjusted in X's and Z's Capital Accounts.

Prepare the Revaluation Account, Partner's Capital Accounts and the Balance Sheet to give effect to the above.

A. B and C are in partnership sharing profits in the ratio of 3:2:1. On 28th February, 2023 C retires from the firm. Their Balance Sheet on this date was as follows :

The following was agreed upon :

(i) Goodwill of the firm is valued at Rs. 1,50,000. C sells his share of goodwill to A and B in the ratio of 4: 1.

(ii) Stock is revalued at 3,00,000 and debtors are revalued at Rs. 1,50,000.

(iii) Outstanding expenses be brought down to Rs. 3,000.

(iv) Investments are sold at a loss of 10%.

(v) C is paid off in full.

Prepare Revaluation Account, Capital Accounts and the Balance Sheet of the new firm.

On 31st March, 2022 the Balance Sheet M/s A, B and C sharing profits and losses in proportion to their fixed capitals stood as follows :

BALANCE SHEET OF X, Y AND Z

On 1st April, 2022, B wants to retire from the firm and the remaining partners decide to carry on. The following re-adjustments of assets and liabilities have been agreed upon before the ascertainment of the amount payable to B :

(i) That, out of the Fire Insurance Premium paid during 2021-22, Rs. 10.000 be carried forward as unexpired.

(ii) That the land and buildings be appreciated by 10%.

(iii) That provision for doubtful debts be brought upto 5% on debtors.

(iv) That the machinery be depreciated by 5%.

(v) That a provision for Rs. 15,000 be made in respect of an outstanding bill for repairs.

(vi) That the goodwill of the entire firm be at Rs. 1,80,000 and B’s share of the same adjusted in the A/cs of A and C who share future profits in the proportion of 3/4th and 1/4th respectively; and

(vii) That B be paid Rs. 50,000 in cash and the balance be transferred to his Loan A/c.

Prepare Revaluation A/c, Partner‘s Current Accounts, Capital A/cs and the Balance Sheet of the firm of A and C.

Piu and Ninu are partners in a firm sharing profits and losses in the ratio of 3:1 respectively. Nina retires and her claim, including her capital and entitlements from the firm including her share of goodwill of the firm, is Rs. 60,000.

After this amount was determined, it was found that there was some unrecorded office equipment valued at Rs. 18,000 which had to be recorded.

Upon recording this office equipment, the revised amount due to Nina was determined and Piu settled it by giving Nina this office equipment and for the balance she drew a promissory note.

You are required to give the necessary journal entries to record the transactions on the date of Nina’s retirement.

P, Q and R are partners in a firm. Q retires and his claim including his capital and his share of goodwill is Rs. 8,00,000. There was an unrecorded furniture valued at Rs. 60,000, three-fourth of which was given to an unrecorded creditors of Rs. 1,00,000 in settlement of his claim of Rs. 70,000 and remaining one-fourth was given to Q at Rs. 12,000 in part settlement of his claim. Balance of Q’s claim was discharged by cheque. Pass necessary Journal entries.

The Balance Sheet of X, Y and Z who were sharing profit in proportion of capitals is as follows:

Y retires and the following adjustments of the assets and liabilities have been made before the ascertainment of the amount payable by the firm to Y :

(i) That the stock be depreciated by 5%.

(ii) That the provision for doubtful debts be increased to 5% on debtors.

(iii) That the land and building be appreciated by 20%.

(iv) That a provision of Rs. 750 be made in respect of outstanding legal charges.

(v) That the Goodwill of the entire firm be fixed at Rs.16,200 and Y‘s share of the same be adjusted into the Accounts of X and Z.

(vi) That X and Z decide to share future profits of the firm in equal proportion.

(vii) That the entire capital of the new firm is fixed at Rs. 48,000 between X and Z in equal proportions. For the purpose, actual cash is to be brought in or paid off.

You are required to prepare the Revaluation Account, Partner's Capital Accounts, Bank account and revised balance sheet after Y’s retirement. Also indicate the gaming ratio.

Ajay, Vijay and Sanjay are partners in a firm sharing profits and losses in the ratio of 5 : 4 : 3. Vijay retires. After making all adjustments relating to revaluation, goodwill and accumulated profits, etc. the capital account of Ajay showed a credit balance of Rs. 2,00,000 and that of Sanjay Rs. 1,00,000. It was decided to adjust the capitals of Ajay and Sanjay in their profit sharing ratio. You are required to calculate the new capital of the partner’s and record necessary entry for surplus/deficit.

X, Y and Z are partners in a firm sharing profits in the ratio of 3 : 2 : 1. On April 1st 2024, X retires from the firm, Y and Z agree that the capital of the new firm shall be fixed at Rs. 2,10,000 in the profit sharing ratio. The Capital Accounts of Y and Z after all adjustments on the date of retirement showed balances of Rs. 1,45,000 and Rs. 63,000 respectively. State the amount of actual cash to be brought in or to be paid to the partners.

A, B and C are partners sharing profits in 4:3:3. Their Balance Sheet as at 31st March 2020 was as follows:

C retires on 1st April, 2020 and A and B decide to share future profits in the ratio of 6 : 4. It is agreed that:

(i) Goodwill of the firm is valued at Rs. 80,000.

(ii) Land & Building is undervalued by Rs. 1,00,000 and Stock is overvalued by 20%.

(iii) Provision for Doubtful Debts is to be decreased to Rs. 10,000.

(iv) Computer valued 730,000 was unrecorded in the books.

It was decided to pay off C by giving him this computer and the balance in annual instalments of Rs. 1,00,000 together with interest @ 10% p.a.

You are required to prepare :

(a) Revaluation Account.

(b) C’s Capital Account, and

(c) C’s Loan Account till it is finally closed.

Lalit, Madhur and Neens were partners sharing profits as 50%, 30% and 20% respectively. On 31st March, 2021, their Balance Sheet was as follows :

On this date, Madhur retired and Lalit and Neena agreed to continue on the following terms :

(a) The goodwill of the firm was valued at Rs. 51,000.

(b) There was a claim for Workmen's Compensation to the extent of Rs. 6,000.

(c) Investment were brought down to Rs. 15,000.

(d) Provision for bad debts was reduced by Rs. 1,000.

(e) Madhur was paid Rs. 10,300 in cash and the balance was transferred to his loan account payable in two equal instalments together with interest @12% p.a.

Prepare Revaluation Account, Partners’ Capital Accounts and Madhur’s Loan Account till the loan is finally paid off.

R, S and T were partners in a firm sharing profits in 2:2:1 ratio. On 1-4-2021 their Balance Sheet was as follows:

S retired from the firm on 1-4-2021 and his share was ascertained on the revaluation of assets as follows :

Stock Rs. 40,000; Furniture Rs. 6,000; Plant and Machinery Rs. 18,000; Building Rs. 40,000; Rs. 1,700 were to be provided for doubtful debts. The goodwill of the firm was valued at Rs. 12,000.

S was to be paid Rs. 21,680 in cash on retirement and the balance in three equal quarterly instalments (starting from 30th June 2017) along with interest @12% . Prepare Revaluation Account, Partner’s Capital Accounts, S’s Loan Account and Balance Sheet on 1-4 -2021.

Following is the Balance Sheet of G, K & W as at 31st March, 2019 who share profits in the ratio of 3 : 2 : 1.

On 1st April, 2019. G retired and the following arrangements were agreed upon :

(1) Goodwill of the firm is to be valued at Rs. 15,000.

(2) The assets and liabilities are to be valued as under: Stock Rs. 10,000; Sundry Debtors Rs. 11,500; Land and Buildings Rs. 18,000; Plant and Machinery Rs. 16,500; and Sundry Creditors Rs. 9,200.

(3) Liability for Workmen's Compensation amounting to Rs. 500 is to be brought into the books.

(4) The entire capital of the firm as newly constituted be fixed at Rs. 35,000 between K and W in the proportion of 4:3 and the actual cash to be paid off or to be brought in by continuing partners as the case may be.

(5) Rs. 13,150 were paid to G. The balance due to him was to be paid in three equal instalments annually together with interest @ 12% per annum.

Give necessary ledger accounts, the Balance Sheet of the firm after G’s retirement and G’s Loan Account till it is finally paid off.

P, Q and R were partners sharing profits and losses in the ratio of 5 : 3 : 2 respectively. As at 31st March, 2022, the Balance Sheet of the firm stood as follows :

On this date Q decided to retire and for this purpose :

(a) Goodwill was valued at Rs. 19,000;

(b) Fixed assets were valued at Rs. 30,000;

(c) Stock was considered as worth Rs. 10,000.

Q was to be paid through cash, brought in by P and R, in such a way as to make their capitals proportionate to their new profit sharing ratio which was to be P 3/5 and R 2/5.

Record these matters in the journal of the firm and prepare the resultant Balance Sheet.

P, Q and R are partners in a firm. R retires from the firm. On the date of retirement, Rs. 3,00,000 is due to him. It is agreed to pay him in instalments every year at the end of the year. Prepare R’s Loan Account in the following cases :

(i) Five yearly instalments plus interest @ 15% p.a.

(ii) Instalments of Rs. 1, 00,000 which already includes interest @ 15% p.a. on the outstanding balance for the first four years and the balance including interest in the fifth year.