There are almost same adjustments in case of death, as done in case of retirement, except these two major points:

1. The time of death is uncertain, so the profit or loss needs to be estimated from the date of last balance sheet up to the date of death.

2. Joint life policy taken by the partners matures and is to be shared by them at the full value.

The accounting adjustments required at the time of death of a partner are same as in case of retirement. The following amounts are usually taken into account while ascertaining the share of a deceased partner.

Debit Amounts Credit Amounts
Debit balance of capital

Debit balance of current account

His share of loss on revaluation of assets/liabilities

His share of undistributed losses

His share of estimated loss to date of death

His drawings

Interest on his drawings

Credit balance of capital account

Credit balance of current account

His share of goodwill

His share of profit on revaluation of assets/liabilities

His share of estimated profit to date of death

Interest on his capital

His share of balance in Joint life policy

 

Estimated Profit on Death of Partner

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