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On Dissolution, How You Deal with Partner’S Loan If It Appears on the (A) Assets Side of the Balance Sheet - Accountancy

Short Note

On dissolution, how you deal with partner’s loan if it appears on the
Assets side of the Balance Sheet

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Solution

If partner's loan appears on the assets side of the Balance Sheet then it implies that the partner has taken loan from the business and is liable to pay back to the business. In such case, the loan amount is transferred to his capital account. Thus the accounting entry will be:

Partner’s Capital A/c                                                            Dr.
        To Partner's Loan A/c
(Partner's loan transferred to Partner's Capital Account)

Concept: Dissolution of a Partnership Firm - Settlement of Accounts
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APPEARS IN

NCERT Class 12 Accountancy - Not-for-profit Organisation and Partnership Accounts
Chapter 5 Dissolution of Partnership Firm
Exercise | Q 3.1 | Page 248
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