Ram, a partner, died on 31st March, 2022. His share of loss was ₹10,000. Following journal entry will be passed in the books of Account to record the above adjustment.
Answer & explanation
Correct answer: option 4
The correct answer is Option 4-
Ram's Capital A/c Dr 10,000
To P & L suspense A/c 10,000
To account for the deceased partner's share of profits and loss during the interim period in the company's financial records, the following journal entry is recorded-
FOR PROFIT-
Debit Profit and Loss Suspense Account and Credit Deceased Partner's Capital Account.
Subsequently, the Profit and Loss Suspense Account is reconciled by transferring its balance to the Gaining Partners' Capital Accounts based on their gaining ratio.
FOR LOSS-
Debit Deceased Partner's Capital Account and credit Profit and Loss Suspense Account.