In case of death of a partner, for deceased partner's share of profits for the intervening period (from the closing of last year account till the date of death) in the books of accounts, the following journal entry is recorded:
Profit and Loss Suspense A/c Dr.
To Deceased Partner's Capital A/c
Which of the following entry is to be made later to close the Profit and Loss Suspense Account?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Gaining Partners Capital A/c Dr., To Profit and Loss Suspense A/c
The first entry credits the deceased partner with his share of profit up to the date of death and debits Profit and Loss Suspense Account, which only holds the amount for the time being, because the year’s accounts are not yet closed. The gaining partners take over the deceased partner’s share of the business, so they bear that profit among themselves.
NCERT (2026-27 edition):
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