Explain the modes of payment to a retiring partner.

Explanation

Payment to a retiring partner can be made in the following ways

(i) Lump Sum Payment: A lump sum payment can be made to the retiring partner in full settlement.


(ii) gap the Loan Account: generally the quantity thanks to the retiring partner is paid in installments then the leveling figure of his/her capital account is transferred to his/her loan account, during this case, the retiring partner receives equal installments together with the interest on the quantity outstanding. in this case, the subsequent journal entries are passed for transferring the quantity paid to him/her in the retiring partner’s loan account.


(iii)Some Payment in money and a few in Instalment: generally quantity|the quantity|the number} because of the retiring partner is paid partially in money and partially in equal installments therein case a particular quantity is paid in money to the retiring partner and therefore the rest amount because of him/her is transferred to his/her loan account. the subsequent necessary journal entry is to be passed.