If loan of ₹1,10,000 from X, a partner , appears on the liability side of the balance sheet of the - Accountancy - Dissolution of Partnership Firm

Question

If loan of ₹1,10,000 from X, a partner , appears on the
liability side of the balance sheet of the firm and X’s
capital account has a debit balance of ₹10,000 What journal
entry will be passed on payment of such loan at the time of
dissolution of the firm

Neha Chopra · Accepted Answer

Dear Student

If a partner has a debit capital balance after all the adjustments
of dissolution, His loan account to the firm shall be transferred
to his capital account to the extent of the debit balance and the
balance shall be treated as liability and shall be paid as
liability is paid

Therefore Journal entries:

Journal in the books

Date
Particulars

Debit
Credit

X's Loan A/c
Dr
10,000

To X's Capital A/c

10,000

(Being adjustment made for debit balance
of capital account)

X's Loan A/c
Dr
100,000

To Bank A/c

100,000

(Being Remaining loan discharged as
liability on dissolution)

Regards

Journal in the books
Date	Particulars		Debit	Credit

	X's Loan A/c	Dr.	10,000
	To X's Capital A/c			10,000
	(Being adjustment made for debit balance of capital account)

	X's Loan A/c	Dr.	100,000
	To Bank A/c			100,000
	(Being Remaining loan discharged as liability on dissolution)

If loan of ₹1,10,000 from X, a partner , appears on the liability side of the balance sheet of the firm and X’s capital account has a debit balance of ₹10,000. What journal entry will be passed on payment of such loan at the time of dissolution of the firm .