*Profit and Loss (Suspense) A/c Dr.
To Deceased Partner's Capital A/c
(Being the share of profit for the intervening period)-
To record the deceased partner's share of profits for the intervening period in the books of account, the above journal entry is recorded. In this entry, the Profit and Loss (Suspense) Account is debited with the deceased partner's share of profit for the period between the last balance sheet date and the date of their death. Simultaneously, the Deceased Partner's Capital Account is credited with the same amount.
* Interest A/c Dr. (To record the interest amount)
To Retiring Partner's Loan A/c
(To adjust the interest against the loan)
When settling the Loan Account of a retiring partner by paying in installments, which includes both principal and interest, the journal entries are recorded. In this entry, the Interest Account is debited with the interest amount payable to the retiring partner. Simultaneously, the Retiring Partner's Loan Account is credited to account for the interest adjustment against the loan.
* Retiring Partners’ Capital A/c Dr.
To Retiring Partners’ Loan A/c
Once all adjustments, such as the retiring partner's share of goodwill, accumulated profits, losses, revaluation gains/losses, and any other relevant factors, have been made, the total amount due to the retiring partner is ascertained. If the firm is capable of making the full payment immediately, the amount is paid to the retiring partner without delay. However, if the firm is unable to make the full payment immediately, the amount due is transferred to the retiring partner's Loan Account. As and when the firm is capable of making payments, the amounts are debited from the Loan Account and credited to the retiring partner's account accordingly. This ensures that the retiring partner eventually receives the full amount owed to them over time as per the agreed terms.
* Gaining Partners' Capital A/c [In gaining ratio]
To Profit and Loss (Suspense) A/c
(Profit and Loss Suspense account transferred)
To close the Profit and Loss (Suspense) Account, the balance of the account is transferred to the Gaining Partners' Capital Accounts in their gaining ratio. The journal entry for this is as follows
Gaining Partners' Capital A/c [In gaining ratio]
To Profit and Loss (Suspense) A/c
(Profit and Loss Suspense account transferred) |
