1. Death of A Partner The partnership comes to an end immediately, whenever a
partner dies although the firm may continue with the remaining partners.
The deceased partner is entitled to get his share in the firm as per the provision of a
partnership agreement. His share in the firm is calculated in the same manner as in
the case of a retiring partner.
2. Accounting Treatment of Deceased Partners’ Share in Profits If a partner dies
on any date after the date of the balance sheet, then his share of profit is calculated
from the beginning of the year to the date of death on the basis of time or sales.
When share of profit is calculated on the basis of time, it may be on the basis of
previous years’ profit or average profit of past years.
3. Ascertainment of the Amount Due to the Deceased Partner The deceased
partner’s share is also calculated in the same manner as in the case of retiring
partner. Amount due to a deceased partner shown by his capital account is
transferred to his executors’ account by passing the following journal entry
Deceased Partner’s Capital A/c Dr
To Deceased Partner’s Executors A/c
Previous Years Examination Questions
1 Mark Questions
1. A, T and R were partners in a firm sharing profits in the ratio of 5 : 6 : 7
respectively. Their capitals were Rs. 5,00,000; Rs. 6,00,000 and Rs. 7,00,000
respectively. State the ratio in which the goodwill of the firm amounting to
Rs. 16,00,000 will be adjusted in the capital accounts of A and T in case of R’s
death. (Compartment 2014)
Ans. Goodwill of the firm, at the time of R’s death, will be adjusted among A and T in
gaining ratio.
2. At what rate is interest payable on the amount remaining unpaid to the
executor of deceased partner? (All India 2013; hots)
Ans. Interest is payable @ 6% per annum on the amount remaining unpaid to the
executor of deceased partner.
, 3. Name the account which is opened to credit the share of profit of the
deceased partner, till the time of his death to his capital
account. (Delhi 2013; HOTS)
Ans. ‘Profit and loss suspense account’ is opened, to credit the share of profit of the
deceased partner.
4. State any two deductions that may have to be made from the amount
payable to the legal representative of a deceased partner. (All India 2009)
Ans. (i) Deceased partner’s share of loss on revaluation of assets and liabilities.
(ii) Drawings made by deceased partner till the date of death.
3 Marks Question
5. A, B and C are partners in a firm whose books are closed on 31st March
each year. B died on 30th June, 2009 and according to the agreement, the
share of profit of a deceased partner up to the date of the death is to be
calculated on the basis of the average profits for the last five years. The net
profits for the last 5 years have been 2005 : Rs. 14,000; 2006 : Rs. 18,000; 2007
: Rs. 16,000; 2008 : Rs. 10,000 (loss) and 2009 : Rs. 16,000. Calculate B’s share
of profits upto the date of death and pass necessary journal entry. (All India
2010)
Ans. Calculation of B’s Share of Profit
Last 5 years’ total profit = 14,000 +18,000 +16,000 -10,000 +16,000 =Rs. 54,000
Average profit = 54, = Rs. 10,800
B’s share of profit = 10,800 x 1/3 x 3/12 = Rs. 900
4 Marks Questions
6. Monika, Sonika and Manisha were partners in a firm sharing profits in the
ratio of 2:2:1 On 31st March, 2013 their balance sheet was as under
Sonika died on 30th June, 2013. It was agreed between her executors and the
remaining partners that
(i) Goodwill of the firm be valued at 3 years’ purchase of average profits for the
last four years. The average profits were Rs. 2,00,000.
partner dies although the firm may continue with the remaining partners.
The deceased partner is entitled to get his share in the firm as per the provision of a
partnership agreement. His share in the firm is calculated in the same manner as in
the case of a retiring partner.
2. Accounting Treatment of Deceased Partners’ Share in Profits If a partner dies
on any date after the date of the balance sheet, then his share of profit is calculated
from the beginning of the year to the date of death on the basis of time or sales.
When share of profit is calculated on the basis of time, it may be on the basis of
previous years’ profit or average profit of past years.
3. Ascertainment of the Amount Due to the Deceased Partner The deceased
partner’s share is also calculated in the same manner as in the case of retiring
partner. Amount due to a deceased partner shown by his capital account is
transferred to his executors’ account by passing the following journal entry
Deceased Partner’s Capital A/c Dr
To Deceased Partner’s Executors A/c
Previous Years Examination Questions
1 Mark Questions
1. A, T and R were partners in a firm sharing profits in the ratio of 5 : 6 : 7
respectively. Their capitals were Rs. 5,00,000; Rs. 6,00,000 and Rs. 7,00,000
respectively. State the ratio in which the goodwill of the firm amounting to
Rs. 16,00,000 will be adjusted in the capital accounts of A and T in case of R’s
death. (Compartment 2014)
Ans. Goodwill of the firm, at the time of R’s death, will be adjusted among A and T in
gaining ratio.
2. At what rate is interest payable on the amount remaining unpaid to the
executor of deceased partner? (All India 2013; hots)
Ans. Interest is payable @ 6% per annum on the amount remaining unpaid to the
executor of deceased partner.
, 3. Name the account which is opened to credit the share of profit of the
deceased partner, till the time of his death to his capital
account. (Delhi 2013; HOTS)
Ans. ‘Profit and loss suspense account’ is opened, to credit the share of profit of the
deceased partner.
4. State any two deductions that may have to be made from the amount
payable to the legal representative of a deceased partner. (All India 2009)
Ans. (i) Deceased partner’s share of loss on revaluation of assets and liabilities.
(ii) Drawings made by deceased partner till the date of death.
3 Marks Question
5. A, B and C are partners in a firm whose books are closed on 31st March
each year. B died on 30th June, 2009 and according to the agreement, the
share of profit of a deceased partner up to the date of the death is to be
calculated on the basis of the average profits for the last five years. The net
profits for the last 5 years have been 2005 : Rs. 14,000; 2006 : Rs. 18,000; 2007
: Rs. 16,000; 2008 : Rs. 10,000 (loss) and 2009 : Rs. 16,000. Calculate B’s share
of profits upto the date of death and pass necessary journal entry. (All India
2010)
Ans. Calculation of B’s Share of Profit
Last 5 years’ total profit = 14,000 +18,000 +16,000 -10,000 +16,000 =Rs. 54,000
Average profit = 54, = Rs. 10,800
B’s share of profit = 10,800 x 1/3 x 3/12 = Rs. 900
4 Marks Questions
6. Monika, Sonika and Manisha were partners in a firm sharing profits in the
ratio of 2:2:1 On 31st March, 2013 their balance sheet was as under
Sonika died on 30th June, 2013. It was agreed between her executors and the
remaining partners that
(i) Goodwill of the firm be valued at 3 years’ purchase of average profits for the
last four years. The average profits were Rs. 2,00,000.
