A: B: Care partners sharing profits and losses in this ratio 3:2:1 on 1st November C died. His capital balances after all adjustment was 60,000. A and B decided to transfer this amount to his executors a/c. What will be this journal entry?
(1) C's capital a/c Dr 60,000
To C's execution a/c 60,000
(2) C's execution a/c Dr 60,000
To Bank a/c 60,000
(3) A's capital a/c Dr 30,000
B's capital a/c Dr 30,000
To C's capital a/c 60,000
(4) C's capital Dr 60,000
To Bank 60,000
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Shift 26/05/2023 8:30 AM - 10:30 AM
A
C's capital a/c Dr 60,000 To C's execution a/c 60,000
B
C's execution a/c Dr 60,000 To Bank a/c 60,000
C
A's capital a/c Dr 30,000B's capital a/c Dr 30,000 To C's capital a/c 60,000
D
C's capital Dr 60,000 To Bank 60,000
Correct Answer
C's capital a/c Dr 60,000 To C's execution a/c 60,000
Detailed Explanation
The accounting treatment for the transfer of a partner's interest to an executor (typically due to the death of a partner) involves several steps to adjust the partner's capital account and recognize the changes in the partnership's ownership structure. Here's a general guide on the accounting treatment:
Determine the Deceased Partner's Capital Balance:
- Calculate the deceased partner's capital balance up to the date of death. The capital balance includes the partner's share of profits or losses, additional investments or withdrawals, and any other adjustments based on the partnership agreement.
Prepare Journal Entry for the Deceased Partner's Share:
- Debit the deceased partner's capital account for the amount of their capital balance.
- Credit the deceased partner's current account or executor's account for the same amount.
- This entry reflects the removal of the deceased partner's capital from the partnership and the creation of a new account to track the amount payable to the executor.
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