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Conversion of Profit into loan in LLP
Hello sir I have a simple querry from my side can a partner convert his accumulated profit into loan to LLP firm merely through book entry and reduce his profit share and without actual moving of funds?
Replies (3)
Quick Summary
Yes.
By Retained earnings a/c
To Loan a/c
The assets=liabilities still intact
Yes.
By Retained earnings a/c
To Loan a/c
The assets=liabilities still intact
Even acca partnership accounts does not give balance sheet treatment. however when you draw your profit, its like
By Appropriation a/c
To Partner current account a/c
So this means, profits are dropped into your bank account already. Instead
By Appropriation a/c
To Loan account
and give a narration
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