Question

Manoj and Sanjeev are partners in a firm sharing profits and losses in the ratio of 2 : 3. They decide to dissolve the firm. On the date of dissolution of firm, Manoj’s Loan to the firm was ₹ 1,50,000 whereas Sanjeev’s wife’s loan was ₹ 1,80,000. The cash available with the firm is ₹ 1,20,000. How this amount will be paid?

Options

• ₹ 1,20,000 to Manoj’s wife’s loan

• In the ratio of 2 : 3.

• In the ratio of 5 : 6.

• In the ratio of 1 : 1.

Answer 1

₹ 1,20,000 to Manoj’s wife’s loan

Explanation:

Under Section 48 of the Partnership Act, outside debts must be paid before internal partner loans. Sanjeev’s wife’s loan is an outside liability, while Manoj’s loan is an internal partner loan. Since the available cash of ₹ 1,20,000 cannot even cover the wife’s loan of ₹ 1,80,000, the entire amount will be paid towards her loan first, leaving nothing for Manoj.