On the dissolution of a partnership firm, repayment of a partner's loan by the firm is recorded in:

Credit side of the Bank A/c

The correct answer is option 4- Credit side of the Bank Account.

On a Dissolution of a firm, repayment of Partner's loan to the firm will be shown on the credit side of Bank A/c.

Partners' outstanding loans are repaid in proportion to their loan balances, using the remaining cash in the Realization Account. So, The amount realized from assets along with contribution from partners, if required, shall be utilized first to pay off the outside liabilities of the firm such as creditors, loans, bank overdraft, bill payables, etc. (it may be noted that secured loans have precedence over the unsecured loans); the balance should be applied to repay loans made by the partners to the firm. (in case the balance amount is not adequate enough to pay off such loans and advances, they are to be paid proportionately). The following journal entry is passed for this-

Partner’s Loan A/c Dr.
     To Bank A/c