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Question -

All partners wish to dissolve the firm. Yastin, a partner wants that her loan of тВ╣ 2, 00,000 must be paid off before the payment of capitals to the partners. But, Amart, another partner wants that the capitals must be paid before the payment of YastinтАЩs loan. You are required to settle the conflict giving reasons.



Answer -

As per section 48 of Partnership Act 1932, at the time of dissolution, loans and advances from the partners must be paid off before the settlement of their capital accounts. Hence, YastinтАЩs argument is correct that her loan of тВ╣ 2, 00,000 must be paid off before the payment of partnersтАЩ capital.

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