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Partner's Capital Accounts

What type of ...

Question

What type of account is a partners loan account ? How do the golden rules of accounting apply on them ?

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Solution

Partners Loan account is a Personal Account. The golden rule for accounting for personnel account is ‘Debit the receiver, Credit the giver’. Therefore, whenever a loan is obtained from a partner, we credit the partner’s loan account as partner is the giver of the loan.

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Q. The rules of debit and debit are applied to ______ type of accounts.

Q. When is a claim of retiring partner transferred to Loan account which accounts it is credited to?

Q. If a loan from a partner appears on the liabilities side of the Balance Sheet of the firm and the Capital Account of such partner shows a debit balance, how is loan dealt with?

Q. Bale and Yale are equal partners of a firm. They decide to dissolve their partnership on 31st March,2018 at which date their Balance Sheet stood as:


Liabilities		₹	Assets	₹
Capital A/cs:			Building	45,000
Bale	50,000		Machinery	15,000
Yale	40,000	90,000	Furniture	12,000
General Reserve		8,000	Debtors	8,000
Bale's Loan A/c		3,000	Stock	24,000
Creditors		14,000	Bank	11,000

		1,15,000		1,15,000

(a) The assets realised were:
Stock ₹ 22,000; Debtors ₹ 7,500; Machinery ₹ 16,000; Building ₹ 35,000.
(b) Yale took over the Furniture at ₹ 9,000.
(c) Bale agreed to accept ₹ 2,500 in full settlement of his Loan Account .
(d) Dissolution Expenses amounted to ₹ 2,500.
Prepare the:
(i) Realisation Account; (ii) Capital Accounts of Partners;
(iii) Bale's Loan Account; (iv) Bank Account.

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