Journal adjustment entry passed accepted in it act

It assess outstanding ledger balance amount two different parties cash loan creditor and cash loan debtor books mentioned below.

1.cash loan from creditor balance rs:3 lacs(name Mr. A)

2. cash loan to debtor balance rs:2 lacs (name Mr.B)

assess cash loan from creditor balance rs: 3 lacs amount transfered to cash loan to debtor balance amount rs:2 lacs adjustment journal entries passed in books after  remaining balance rs:1 lacs  amount  show in cash loan from creditor balance in books.

Question:

Two different parties cr and dr outstanding balance writen off entry passed allowed in it act.