On dissolution of the firm, partner A demands that his loan of Rs. 1,00,000 should be paid before, payment of Capitals of the partners, whereas partners B and C demand that Capitals should be paid before the payment of A' s loan. State the order of payment.

On dissolution of the firm, partner A demands that his loan of Rs. 1,00,000 should be paid before, payment of Capitals of the partners, whereas partners B and C demand that Capitals should be paid before the payment of A’ s loan. State the order of payment.

SOLUTION

As per Section 48 of the Indian Partnership Act, 1932, partner’s loan is paid before the payment of partner’s Capitals.