Partnership

Retirement/Death

Medium

common

In case of death of a partner, for deceased partner's share of profits for the intervening period (from the closing of last year account till the date of death) in the books of accounts, the following journal entry is recorded:

Profit and Loss Supense A/c Dr.

To Deceased Partner's Capital A/c

Which of the following entry is to be made later to close the Profit and Loss Suspense Account?

Profit and Loss Suspense A/c Dr.

To Gaining Partners Capital A/c

Gaining Partners Capital A/c Dr.

To Profit and Loss Suspense A/c

Deceased Partner's Capital A/c Dr.

To Profit and Loss Supense A/c

Profit and Loss Supense A/c Dr.

To Deceased Partner's Capital A/c

✅ Correct Option: 2

The first entry leaves the Profit and Loss Suspense Account with a debit balance, representing profit already credited to the deceased partner. That share of profit is effectively borne by the partners who gain from his exit.

To close it, their capitals are debited and the suspense account is credited: Gaining Partners' Capital A/c Dr. To Profit and Loss Suspense A/c.

2025: 30 May Shift 1

In the absence of any information regarding the acquisition of share in profit of the retiring/deceased partner by the remaining partners, it is assumed that they will acquire his/her share in:

2026: 12 May Shift 1

Akash, Bhupesh, and Charan are partners in a firm sharing profits in the ratio of 3:2:1. Bhupesh retired and goodwill of the firm was valued at Rs. 60,000. Akash and Charan continue the business, sharing profits in the ratio of 3:1. What will be the journal entry for adjustment of goodwill in this case?

Particulars	Dr. Amount	Cr. Amount
Akash's Capital A/c Dr.	15,000
Charan's Capital A/c Dr.	5,000
To Bhupesh's Capital A/c		20,000

Date	Particulars	L.F.	Dr. Amount	Cr. Amount
	Goodwill A/c Dr.		20,000
	To Bhupesh's Capital A/c			20,000

Particulars	Dr. Amount	Cr. Amount
Bhupesh's Capital A/c Dr.	20,000
To Akash's Capital A/c		15,000
To Charan's Capital A/c		5,000

Date	Particulars	L.F.	Dr. Amount	Cr. Amount
	Bhupesh's Capital A/c Dr.		20,000
	To Goodwill A/c			20,000

2025: 24 May Shift 1

Ram, Karan and Shyam are partners. On retirement of Ram, the goodwill already appears in the Balance Sheet at Rs. 32,000. The goodwill will be written-off.

2026: 19 May Shift 1

Hanny, Pammy and Sunny are partners sharing profits in the ratio of 3 : 2 : 1 and Pammy retires. In the absence of any information regarding the acquisition of share in profit of the retiring partner (Pammy) by the remaining partners, it is assumed that they will acquire his/her share in ____________.

2026: 29 May Shift 2

Sonu, Monu and Gopal are partners in a firm sharing profits and losses in the ratio of 3:2:1. Balance sheet shows workmen compensation reserve of Rs. 48,000. On retirement of Sonu, liability for workmen compensation reserve Rs. 24,000 is to be accounted. What amount of workmen compensation reserve is to be shown in the balance sheet of the reconstituted firm?

2023: 28 May Shift 1

On retirement, the retiring partner's capital account will be credited with :

(A) His/Her Capital Balance

(B) His/Her share of goodwill

(D) his/her share of Reserve

(E) his/her drawings

Choose the correct answer from the options given below :

Solution

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