Question

In case of death of a partner, for deceased partner's share of profits for the intervening period (from the closing of last year account till the date of death) in the books of accounts, the following journal entry is recorded:
Profit and Loss Suspense A/c Dr.
       To Deceased Partner's Capital A/c
Which of the following entry is to be made later to close the Profit and Loss Suspense Account?

• A. Profit and Loss Suspense A/c Dr.
     To Gaining Partners Capital A/c
• B. Gaining Partners Capital A/c Dr.
     To Profit and Loss Suspense A/c
• C. Deceased Partner's Capital A/c Dr.
     To Profit and Loss Suspense A/c
• D. Profit and Loss Suspense A/c Dr.
     To Deceased Partner's Capital A/c

Hint:

The suspense account has a debit balance, so the closing entry must credit it.

Answer 1

The Correct Option is B

Step 1: Approach:
Think of the suspense account as a ledger. It has a debit balance now, so the closing entry must put a credit in it.

Step 2: Find the credit entries:
Options 2 and 3 credit Profit and Loss Suspense A/c. Options 1 and 4 debit it, so they cannot close it.

Step 3: Choose who is debited:
The deceased partner has already been settled. His capital is not charged again, so option 3 is out. The continuing partners share the firm's profit, so their capital accounts take the debit.

Step 4: Read the result:
This gives Gaining Partners Capital A/c Dr. To Profit and Loss Suspense A/c, which is option 2.

Final Answer:
Option 2 closes the suspense account. \[ \boxed{2} \]