Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Reconstitution of Partnership Firm: Retirement and Death

Question:

What journal entry will be recorded for deceased partner's share in profit from the closure of last balance sheet till the date of his death?

Options:

Profit and Loss Suspense A/c  Dr.
   To Deceased Partner's Capital A/c
(Partner profit recorded)

Deceased Partner's Capital A/c  Dr.
   To Profit and Loss Suspense A/c
(Partner profit recorded)

Profit and Loss A/c Dr.
   To Deceased Partner's Capital A/c
(Partner profit recorded)

Deceased Partner's Capital A/c Dr.
  To Profit and Loss A/c 
(Partner profit recorded)

Correct Answer:

Profit and Loss Suspense A/c  Dr.
   To Deceased Partner's Capital A/c
(Partner profit recorded)

Explanation:

For being deceased partner’s share of profits for the intervening period to books of account, the following journal entry is recorded.
Profit and Loss (Supense) A/c Dr.
To Deceased Partner’s Capital A/c
(Share of profit for the intervening period)
Later Profit and Loss Suspense account is closed by transferring the account to Gaining Partners' Capital Account in their gaining ratio.
The journal entry is:
(ii) Gaining Partners Capital A/c [In gaining ratio]
To Profit and Loss Suspense A/c
(P&L Suspense account transferred).