Death of a Partner Accounts

In case of Death of a Partner Accounts are drawn up to settle the account of the deceased partner. All the adjustments are being made in the capital account of the deceased partner and then the balance of the capital account is transferred to his executor’s account.

The legal representative of the partner get  the following amounts : –

  1. Amount  standing to the credit of deceased partners capital account.
  2. Deceased partner’s share of profit upto his death.
  3. His share of increase in the value of goodwill of the firm.
  4. Interest on capital

The following amount is debited from the deceased partner’s capital account:

  1. Drawings, and  interest on drawings, if any
  2. Losses on revaluation of assets and liabilities
  3. Share of undistributed losses

Death of a Partner Accounts – Ascertaining Profits in case of Death of a Partner

The deceased partner is eligible to his share of profit upto his date of death which is calculated under following methods:

  1. On Time Basis: Under this method,  profit earned by the firm during the year of death is calculated  proportionately for the  period served by the deceased partner, and his share is allocated to him/her.
  2. On Turnover Basis: In this method, we consider the profit and total sales earned during the last year and the proportion thereof is applied to  sales  upto the death of the deceased partner.
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