In case, deceased partner's share of pro

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Target Exam

CUET

Subject

-- Accountancy Part A

Chapter

Reconstitution of Partnership Firm: Retirement and Death

Question:

In case, deceased partner's share of profit is calculated during the intervening period, the following Journal Entry will be passed :-

Options:

Remaining Partners' Capital A/c
Dr. To Profit and Loss Suspense A/c

Old Partners' Capital A/c
Dr. To Profit and Loss Suspense A/c

Deceased Partner's Capital A/c
Dr. To Profit and Loss Suspense A/c

Profit and Loss Suspense A/c
Dr. To Deceased Partner's Capital A/c

Correct Answer:

Profit and Loss Suspense A/c
Dr. To Deceased Partner's Capital A/c

Explanation:

The correct answer is Option (4) →

Profit and Loss Suspense A/c
Dr. To Deceased Partner's Capital A/c

Profit and Loss Suspense A/c (Debit): Since the firm's books are not closed on the date of death, the actual profit or loss for the current accounting period is unknown. Therefore, the estimated share of profit is debited to the Profit and Loss Suspense Account. This account acts as a temporary holding account and is later adjusted against the final Profit and Loss Account when the books are closed.
Deceased Partner's Capital A/c (Credit): The deceased partner's capital account is credited with their share of profit, as this amount increases the total sum due to their legal representative.