The correct answer is: The loss has to be borne in the capital ratio by the solvent partners.
In case of dissolution of the partnership, if a partner’s capital account shows a debit balance and he subsequently turns out to be insolvent, the loss has to be borne in the capital ratio by the solvent partners. This is because the solvent partners are the ones who have the resources to bear the loss. The loss is shared in the capital ratio because this is the ratio in which the partners have contributed to the partnership.
The other options are incorrect because they do not take into account the fact that the solvent partners are the ones who have to bear the loss. Option A is incorrect because it says that the loss has to be borne in the capital ratio by all the partners, including the insolvent partner. This is not possible because the insolvent partner does not have the resources to bear the loss. Option B is incorrect because it says that the loss has to be borne in the existing profit sharing ratio. This is not correct because the profit sharing ratio is based on the partners’ expected contributions to the partnership, not on their actual contributions. Option C is incorrect because it says that the loss has to be borne in the adjusted profit sharing ratio after insolvency. This is not correct because the adjusted profit sharing ratio is based on the partners’ actual contributions to the partnership, not on their expected contributions. Option E is incorrect because it says that the loss has to be equally distributed among the solvent partners. This is not correct because the solvent partners are not equally responsible for the loss. The insolvent partner is also responsible for the loss, but he cannot bear it because he does not have the resources.