CMA Intermediate · Financial Accounting · Retirement of Partner

X, Y and Z are partners. Z retires and his capital account shows a credit balance of Rs 80,000 after all adjustments. He is paid Rs 30,000 in cash and the rest is transferred to his loan account. What amount is credited to Z's loan account?

Z is due Rs 80,000, of which Rs 30,000 is paid in cash, so the remaining Rs 50,000 is credited to his loan account.

Explanation

Amount due 80,000 less cash paid 30,000 = 50,000, which is transferred to the loan account. Crediting 80,000 would ignore the cash paid.

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