When a partner retires in the middle of the year and his share of profit is calculated based on previous years' profit. Which of the following account is to be debited?

When a partner retires mid-year, the actual profit for that year is not yet ascertained since the accounting year hasn't ended. Therefore, the retiring partner's share of profit is calculated based on an estimate using previous year's profit.

Since this is only an estimated amount and not the actual profit, it cannot be directly debited to the Profit and Loss Appropriation Account (which deals with distribution of actual, finalized profits).

Profit and Loss Suspense Account is debited to record this estimated profit share given to the retiring partner.

The journal entry would be:

Profit and Loss Suspense A/c ... Dr.

To Retiring Partner's Capital A/c

This suspense account acts as a temporary holding account. At the year-end, when the actual profits are determined, this suspense account will be cleared by transferring it to the Profit and Loss Appropriation Account.

Why other options are incorrect:

Option 1: Profit and Loss Appropriation Account is prepared only at year-end when actual profits are known, not for estimated mid-year profits.

Option 2: Revaluation Account is used for revaluing assets and liabilities at the time of reconstitution, not for recording profit share.

Option 4: Realisation Account is prepared only when the entire firm is dissolved, not when a partner retires.