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What is accounting proceedure for Advances taken by a partner, who is retiring from company ?
Situation : partnership starts in 2008
One partner took advances from company in 2010, 2012, 2013. The partner retires in 2016. Now his final equity share is required to be calculated. How his advances should be charged / deducted from his equity :
1- should it be charged to his equity account in the year of advances taken?
2- should his regular equity account (after distribution of profit / loss) be prepared and then from his final equity amount his PREVIOUS ALL YEARS' advances should be deducted together ?
Situation : partnership starts in 2008
One partner took advances from company in 2010, 2012, 2013. The partner retires in 2016. Now his final equity share is required to be calculated. How his advances should be charged / deducted from his equity :
1- should it be charged to his equity account in the year of advances taken?
2- should his regular equity account (after distribution of profit / loss) be prepared and then from his final equity amount his PREVIOUS ALL YEARS' advances should be deducted together ?