Anil, Bhanu and Chandu were partners in a firm sharing profits in the…

Anil, Bhanu and Chandu were partners in a firm sharing profits in the ratio of 5:3:2. Anil died on May 1, 2025. Half of the amount due to Anil is paid immediately. Choose the correct order of the following entries/ adjustments in the books of account:

(A) Pay half of the amount due to Anil's executor.

(B) Pay remaining half of the amount due with interest to Anil's executor in the next year.

(D) Provide for interest on capital and share of profit/loss till the date of death.

Choose the correct sequence of above adjustments from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (C), (D), (A), (B)

On a partner’s death in the middle of the year, his claim also includes his share of profit and interest from the date of the last Balance Sheet to the date of death. The adjustments therefore follow the dates:

(C) Preparation of Balance Sheet as on March 31, 2025 — the last Balance Sheet, from which the intervening period is counted.
(D) Provide for interest on capital and share of profit/loss till the date of death. — for April 1 to May 1, 2025, so that the full amount due to Anil is known.
(A) Pay half of the amount due to Anil’s executor. — paid at once, as agreed.
(B) Pay remaining half of the amount due with interest to Anil’s executor in the next year. — the balance is settled last, with interest for the delay.

NCERT (2026-27 edition):
Death of a Partner – “As stated earlier, the accounting treatment in the event of death of a partner is similar to that in case of retirement of a partner, and that in case of death of a partner his claim is transferred to his executors and settled in the same manner as that of the retired partner. However, there is one major difference that, while the retirement normally takes place at the end of an accounting period, the death of a partner may occur any time. Hence, in case of a partner, his claim shall also include his share of profit or loss, interest on capital, interest on drawings (if any) from the date of the last Balance Sheet to the date of his death of these, the main problem relates to the calculation of profit for the intervening period (i.e., the period from date of the last balance sheet and the date of the partner’s death.”

NCERT (2026-27 edition):
Disposal of Amount Due to Retiring Partner – “The outgoing partner’s account is settled as per the terms of partnership deed i.e., in lumpsum immediately or in various instalments with or without interest as agreed or partly in cash immediately and partly in instalment at the agreed intervals.”

NCERT (2026-27 edition):
Death of a Partner

Extract from the NCERT textbook