Death of A Partner 2024-25

CLASS XII – PARTNERSHIP – DEATH OF A APRTNER – 2024-25 / pallav dps rohini
DEATH OF A PARTNER
New Ratio Calculation - Same as Retirement
Goodwill - Same as Retirement
Revaluation Account - Same as Retirement
Treatment of
• Reserves – General, Contingency, Workmen Compensation, Investment Fluctuation
• Accumulated Profits – P/L Account
• Deferred Revenue Expenditure
• P/L Account (Dr.)
Same as Admission / Retirement
Preparation of Capital Accounts of ALL Partners
• Same as Retirement except that the deceased partner’s final amount is transferred to
his EXECUTOR’S Account
Dr. Capital Accounts Cr.

Particulars A B C Particulars A B C
` ` ` ` ` `
To Balance b/d * * * By Balance b/d * * *
To Adv Suspense / P/L * * * By G.Reserve / * * *
Account (Dr.) C.Reserve / P/L Acc
To Goodwill (old w/o) * * *
To B Capital A/c * * By A Capital A/c *

* * * By C Capital A/c *
To Revaluation A/c * * * By Revaluation A/c * * *
(loss) (profit)
To Asset A/c By Liability A/c (taken * * *
(taken over) over)
To B’s EXECUTOR’S A/c **
To Balance c/d * * By Balance c/d * *
xxx xxx xxx xxx xxx xxx
Page 1 of 6
Preparation of Capital Account only of the Deceased Partner

Capital Account of Deceased Partner
Particulars ` Particulars `
To Balance b/d By Balance B/d
To Advertising Suspense A/c By G. Res/C. Res/P&L A/c
To P&L A/c By A Capital A/c (premium) w.note
To Goodwill A/c (old w/o) w.note By C Capital A/c (premium) w.note
To Drawings By Revaluation A/c (profit) w.note
To Interest on Drawings w.note By Liability A/c (taken over)
To Revaluation A/c (loss) w.note By Interest on Capital w.note
To Asset A/c (taken over) By Salary w.note
To P&L Suspense A/c (share of w.note By P&L Suspense A/c (share of w.note
loss) profit)
To B’s EXECUTOR’S A/c (bal fig) ****
total total
B’s Executor’s A/c
To Cash A/c (paid off) By B’s Capital A/c ****
To balance c/d
Total Total
Calculation of Interest on Capital
• Interest on Capital = Opening Capital x Rate x months/days alive

12 / 365
Calculation of Salary
• Salary = Per month Salary x months alive
• Salary = Per annum Salary x months alive

12
Calculation of Interest on Drawings
• Interest on Drawings = Given
Page 2 of 6
• If you are asked to calculate irrespective period then

Interest on Drawings = Drawings x Rate
• If Average Rate of Interest on Drawings is given then it is irrespective of period

Interest on Drawings = Drawings x Average Rate
Calculation of Share of Profit or Loss

➢ First Method – Time Basis
Deceased Last Year’s Profit or Average Profit x months/days alive x His profit share
Partner’s 12/365
Share of
Profit =
Example:
A, B and C are partners of 5:3:2 in a firm. B died on 30.6.2024. Accounts are closed on 31st
March every year.
Calculate B’s share of profit on the basis of
1. Last year’s profit.
2. Average of last 3 years profits.
3. Average of last 5 years profits.
4. Total of last two years profits.
The last 5 years profits were

2023-24 ` 30,000
2022-23 ` 60,000
2021-22 ` 90,000
2020-21 ` 45,000
2019-20 ` 45,000
Page 3 of 6
➢ Second Method – Turnover or Sales Basis
Deceased Last Year’s Profit x Sales in current year up to death x His profit share
Partner’s Share Last Year’s Sales
of Profit =
Example:
A, B and C are partners of 5:3:2 in a firm. B died on 30.6.2024. Accounts are closed on 31st
March every year.
Calculate B’s share of profit .
Profit for the year ended 31.3.2024 ` 2,40,000
Sales for the year ended 31.3.2024 ` 24,00,000
Sales from 1.4.2024 to 30.6.2024 ` 7,50,000
Journal Entry for Share of Profit
➢ P/L Suspense A/c Dr.

To Deceased Partner’s Capital A/c
Note :- P/L Suspense A/c (share of Profit) is shown on the Asset Side of the New Balance
Sheet.
OR
➢ Gaining Partners Capital Account Dr.

To Deceased Partner’s Capital Account
Make this entry if there is a change in the New Ratio numbers as compared to the Old Ratio
numbers of the continuing partners
Page 4 of 6
Example:
Dinesh, Alvin and Pramod are partners in a firm sharing profits and losses in the ratio of 5:3:2.
Dinesh died on July 1, 2024
His share of profit up to his date of death on the basis of actual sales till date of death.
Sales for the year ended 31.3.2024 was `12,00,000 and profit for the same year was
`2,00,000. Sales shows a growth trend of 20% and percentage of profit earning remains the
same.
Calculate Dinesh’s share of profit.
Example:
Dinesh, Alvin and Pramod are partners in a firm sharing profits and losses in the ratio of 5:3:2.
Dinesh died on 30.9.2024.
His share of profit up to his date of death on the basis of actual sales till date of death.
Sales for the year ended 31.3.2024 was `12,00,000 and profit for the same year was 10% of
the sales. Sales shows a growth trend of 20% and percentage of profit is reduced by 1%
Calculate Dinesh’s share of profit.
Preparation of Loan Account of Deceased Partner’s Executor –

Similar to Retiring Partner’s Loan A/c
In Retirement the name of account is Retiring Partner’s Loan Account.

And
In Death the name of the account is Deceased Partner’s Executors Account.
Page 5 of 6
CBSE Giriija, Yatin and Zubin were partners sharing profits in the ratio 5:3:2.
2020 Zubin died on 1st August, 2019. Amount due to Zubin after all adjustments was `90,300. His
EXAM executors were paid `10,300 in cash immediately and the balance in two equal annual
instalments with interest @ 6% p.a. starting from 31st March, 2021.
Accounts are closed on 31st March each year.
Prepare Zubin’s Executors Account till finally paid.
Dr. Zubin’s Executors Account Cr.

Date Particulars ` Date Particulars `
Page 6 of 6

Death of A Partner 2024-25

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CLASS XII – PARTNERSHIP – DEATH OF A APRTNER – 2024-25 / pallav dps rohini

New Ratio Calculation - Same as Retirement

Goodwill - Same as Retirement

Revaluation Account - Same as Retirement

Preparation of Capital Accounts of ALL Partners

Dr. Capital Accounts Cr.

To B Capital A/c * * By A Capital A/c *

Preparation of Capital Account only of the Deceased Partner

Calculation of Interest on Capital

• Interest on Capital = Opening Capital x Rate x months/days alive

• Salary = Per month Salary x months alive

• Salary = Per annum Salary x months alive

Calculation of Interest on Drawings

• Interest on Drawings = Given

• If you are asked to calculate irrespective period then

• If Average Rate of Interest on Drawings is given then it is irrespective of period

Calculation of Share of Profit or Loss

The last 5 years profits were

➢ Second Method – Turnover or Sales Basis

Journal Entry for Share of Profit

➢ P/L Suspense A/c Dr.

➢ Gaining Partners Capital Account Dr.

Preparation of Loan Account of Deceased Partner’s Executor –

In Retirement the name of account is Retiring Partner’s Loan Account.

Dr. Zubin’s Executors Account Cr.

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