— Kishore V, SME and ACW at Edumarz
In the event of a partner’s death, the legal executor is entitled to a claim that includes the deceased partner’s share of profit or loss, interest on capital, and interest on drawings.
In that scenario, the amount owed is estimated by creating the capital account of the deceased partner as follows.
Dr Deceased Partner’s A/c Cr
Particulars | Amt | Particulars | Amt |
Revaluation A/c (Loss) Profit and loss suspense A/c (Share of loss up to the date of death) Accumulated loss Share of Goodwill (Written off) Partner’s Executor’s A/c | Balance b/d Profit and loss suspense A/c (Share of profit up to the date of death) Goodwill Reserves and profits Revaluation A/c(Profit) Int. on Capital Salary A/c Commission A/c |
Note: The legal executor will be entitled to the balancing sum in the aforementioned capital account, which is the excess of the credit side over the debit side of the dead partner’s capital account.