Question

X, Y and Z are partners sharing profits in the ratio of 2 : 2 : 1. Z died on 18th December, 2025 and as per agreement, surviving partners X and Y got the financial statements prepared as on 18th December, 2025. The share of loss of Z (deceased partner) was determined as ₹ 2,00,000. Which of the following Journal entries will be passed?

Options

• Z’s Capital A/c   ...Dr.	₹ 2,00,000	-
  To Profit & Loss Suspense A/c	-	₹ 2,00,000

• Profit & Loss Suspense A/c   ...Dr.	₹ 2,00,000	-
  To Z’s Capital A/c	-	₹ 2,00,000

• Profit & Loss Appropriation A/c   ...Dr.	₹ 10,00,000	-
  To X’s Capital A/c	-	₹ 4,00,000
  To Y’s Capital A/c	-	₹ 4,00,000
  To Z’s Capital A/c	-	₹ 2,00,000

• X’s Capital A/c   ...Dr.	₹ 4,00,000	-
  Y’s Capital A/c   ...Dr.	₹ 4,00,000	-
  Z’s Capital A/c   ...Dr.	₹ 2,00,000	-
  To Profit & Loss Appropriation A/c	-	₹ 10,00,000

Answer 1

X’s Capital A/c   ...Dr.	₹ 4,00,000	-
Y’s Capital A/c   ...Dr.	₹ 4,00,000	-
Z’s Capital A/c   ...Dr.	₹ 2,00,000	-
To Profit & Loss Appropriation A/c	-	₹ 10,00,000

Explanation:

Z’s share of loss = ₹ 2,00,000

= 5 × ₹ 2,00,000

= ₹ 10,00,000.

The loss is borne by partners in their profit‑sharing ratio (X = ₹ 4,00,000; Y = ₹ 4,00,000; Z = ₹ 2,00,000).

To record appropriation of that loss, you debit each partner’s Capital A/c (to reduce capital) and credit Profit & Loss Appropriation A/c.