Question

Vijay, Ajay and Sanjay are partners in a firm sharing profits and losses in the ratio of 7 : 5 : 8. Sanjay dies on 28th August, 2021. His share in the profits of the firm till the date of his death was determined at ₹ 75,000. It will be debited to which of the following accounts?

Options

• Profit & Loss Suspense Account.

• Profit & Loss Account.

• Profit & Loss Appropriation Account.

• Profit & Loss Adjustment Account.

Answer 1

Profit & Loss Appropriation Account.

Explanation:

The deceased partner’s share of profit up to the date of death is an appropriation of the firm’s profit and therefore is adjusted through the Profit & Loss Appropriation Account (debited) and credited to the deceased partner’s Capital/Executor’s account.