A and B are partners in a firm sharing profits in the ratio of 3: 2. Mrs. A has given a loan of Rs. 20,000 to the firm and the firm also obtained a loan of Rs. 10,000 from B. The firm was dissolved and its assets were realised for Rs. 25,000. State the order of payment of Mrs. A’ s Loan and B’ s Loan with reason, if there were no creditors of the firm.


As per Section 48 of the Indian Partnership Act, 1932, Mrs. A’s Loan of Rs. 20,000 will be paid first and after that B’ s Loan will be paid up to the available amount of Rs. 5,000.

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