Question

Radha, Tina and Reeta were partners sharing profits equally. Reeta died on 31st July, 2025. Radha and Tina decided to continue the business. Share of profit or loss of the deceased partner from the beginning of the year up to the date of death was to be determined on the basis of last year’s profit, which was ₹ 4,50,000. Pass the necessary journal entry to record. Reeta’s share of profit/loss up to the date of death.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
July 31	Profit & Loss Suspense A/c ...Dr.		50,000	-
	To Reeta’s Capital A/c		-	50,000
	(Being Reeta’s share of estimated profit up to her date of death credited to her capital account)

Working Note:

The time from the start of the financial year (1st April, 2025) to the date of death (31st July, 2025) is exactly 4 months.

Last year’s profit = ₹ 4,50,000

Partners share profits equally (1 : 1 : 1), so Reeta’s share proportion = `1/3`

Reeta’s share of profits = `4,50,000 xx 1/3 xx 4/12`

= 50,000