Q.If the final amount due to a retiring partner is not paid immediately, it is transferred to :

If the amount due to a retiring partner is not paid immediately, it is transferred to the Retiring Partner's Loan A/c — option (a).

In the Retirement and Death of a Partner topic of the TN HSC Commerce syllabus, once the total amount due to the retiring partner is settled through his Capital Account, it can be discharged in three ways: paid fully in cash, paid partly in cash and the balance kept as a loan, or kept entirely as a loan.

When the firm cannot (or does not) pay the amount immediately, the outstanding balance is transferred out of his Capital Account to a Retiring Partner's Loan Account. The entry is:

Retiring Partner's Capital A/c Dr.

To Retiring Partner's Loan A/c

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