When a partner retires in the middle of the year and his share of profit is calculated based on previous years' profit, which of the following account is to be debited?
- AProfit and loss appropriation account is debited.
- BRevaluation account is debited.
- CProfit and loss suspense account is debited.
- DRealisation Account is Debited.
Solution & Step-by-step Explanation
To record the estimated share of profit given to a retiring or deceased partner for the interim period (from the last balance sheet date to the date of retirement/death), the journal entry is:
Hence, the Profit and Loss Suspense Account is debited.
Hence, the Profit and Loss Suspense Account is debited.