how to treat bank overdraft?
Dear Student
If Bank Overdraft is given in the Balance Sheet in the question then it represents the negative Cash balance. Hence, it is shown on the credit side of the Bank Account (at the time of Admission of a Partner).
However, if at the time of Admission of a Partner, Bank Account shows a negative balance i.e. when debit side is more than the credit side (after all adjustment) then it is termed as Bank Overdraft and shown on the Liability side of Reconstituted Firm's Balance Sheet.
If Bank Overdraft is given in the Balance Sheet in the question then it represents the negative Cash balance. Hence, it is shown on the credit side of the Bank Account (at the time of Admission of a Partner).
However, if at the time of Admission of a Partner, Bank Account shows a negative balance i.e. when debit side is more than the credit side (after all adjustment) then it is termed as Bank Overdraft and shown on the Liability side of Reconstituted Firm's Balance Sheet.