Question

Amit, Bhanu and Charu are partners. Charu died on 18th December, 2025 and as per the agreement, remaining partners Amit and Bhanu prepared the financial statements as on 18th December, 2025. The share of profit of Charu was determined as 1,00,000. Which of the following Journal entries will be passed?

Options

• Profit & Loss Suspense A/c   ...Dr.	₹ 1,00,000	-
  To Charu’s Capital A/c	-	₹ 1,00,000

• Profit & Loss Appropriation A/c   ...Dr.	₹ 3,00,000	-
  To Amit’s Capital A/с	-	₹ 1,00,000
  To Bhanu’s Capital A/c	-	₹ 1,00,000
  To Charu’s Capital A/c	-	₹ 1,00,000

• Profit & Loss Suspense A/c   ...Dr.	₹ 3,00,000	-
  To Amit’s Capital A/с	-	₹ 1,00,000
  To Bhanu’s Capital A/c	-	₹ 1,00,000
  To Charu’s Capital A/c	-	₹ 1,00,000

   

• Charu’s Capital A/c   ...Dr.	₹ 1,00,000	-
  To Profit & Loss Suspense A/c	-	₹ 1,00,000

Answer 1

Profit & Loss Appropriation A/c   ...Dr.	₹ 3,00,000	-
To Amit’s Capital A/с	-	₹ 1,00,000
To Bhanu’s Capital A/c	-	₹ 1,00,000
To Charu’s Capital A/c	-	₹ 1,00,000

Explanation:

Because the books were prepared as on the date of death, the firm’s net profit for the period is transferred to the Profit & Loss Appropriation Account and then appropriated among all partners (including the deceased) in their profit‑sharing ratio.