Partners Capital Account: After the transfer of profit or loss on realization, undistributed profit reserves etc. to the capital account of the partners,
The balance of capital account are closed in the following manner :
1. When a partner is required to bring in cash to clear off his debit balance. The entry will be
Cash/Bank A/C Dr.
To Partners’ Capital A/c
(Being required cash brought in by the partner)
2. When a partner is paid the credit balance of his account Partners
Capital A/c Dr.
To Cash/Bank A/c .
(Being excess cash paid to partner)
