When the deceased partner's share in the estimated loss is calculated for a period from the date of the latest Balance Sheet to the date of death of the partner, then:
- AProfit and Loss Suspense Account will be debited and the Old Partner's Capital Account will be credited.
- BProfit and Loss Suspense Account will be debited and the Gaining Partner's Capital Account will be credited.
- CProfit and Loss Suspense Account will be debited and Deceased Partner's Capital Account will be credited.
- DProfit and Loss Suspense Account will be credited and Deceased Partner's Capital Account will be debited.
Solution & Step-by-step Explanation
If there is an estimated profit up to the date of death, we debit Profit & Loss Suspense A/c and credit Deceased Partner's Capital A/c. Conversely, if there is an estimated loss, the entry is inverted:
Therefore, the Profit and Loss Suspense Account will be credited and the Deceased Partner's Capital Account will be debited.
Therefore, the Profit and Loss Suspense Account will be credited and the Deceased Partner's Capital Account will be debited.