Question

A and B are partners in a firm sharing profits in the ratio of 3 : 2. Mrs. A has given a loan of ₹ 20,000 to the firm and the firm also obtained a loan of ₹ 10,000 from B. The firm was dissolved and its assets were realised for ₹ 25,000. State the order of payment of Mrs. A’s Loan and B’s Loan with reason, if there were no creditors of the firm.

Answer 1

Under Section 48 of the Indian Partnership Act, 1932, Mrs. A’s loan of ₹ 20,000 will be settled first, and thereafter, B’s loan will be repaid to the extent of the remaining ₹ 5,000 available.