Question

On dissolution, how you deal with partner’s loan if it appears on the

(a) Assets side of the Balance Sheet.

(b) Liabilities side of the Balance Sheet.

Answer 1

(a) When Partner’s loan is given on the assets side of the Balance Sheet it is shown on the debit side of the Partner’s Capital A/c.

(b) When Partner’s loan is given on the liabilities side of the Balance Sheet, it is shown separately under Partner’s Loan A/c and from there it is paid off.