Question

Anita and Binita are partners in a firm. Anita had taken a loan of ₹ 1,00,000 from the firm. She paid ₹ 60,000 by cheque. How will Anita’s Loan Account be closed on dissolution of the firm?

Options

• By crediting Bank A/c by ₹ 60,000 and Anita’s Capital A/c by ₹ 40,000.

• By debiting Bank A/c by ₹ 60,000 and crediting Anita’s Capital A/c by ₹ 40,000.

• By debiting Bank A/c by ₹ 60,000 and Anita’s Capital A/c by ₹ 40,000.

• By debiting Bank A/c by ₹ 60,000 and Realisation A/c by ₹ 40,000.

Answer 1

By debiting Bank A/c by ₹ 60,000 and Anita’s Capital A/c by ₹ 40,000.

Explanation:

Anita's Loan Account (₹ 1,00,000) is an asset for the firm that must be closed during dissolution. When she pays ₹ 60,000 by cheque, that amount is debited to the Bank Account because cash comes into the business. The remaining unpaid balance of ₹ 40,000 is recovered by deducting it directly from her capital, which is done by debiting Anita’s Capital Account. These two debit entries together completely close her outstanding loan account.