Question

Journal entry of goodwill(not in balance sheet) and profit and loss suspense account in Chapter of Retirement/Death?

Answer 1

Journal Entry for goodwill (retiring partner) be as -

Gaining partners capital a/c. Dr
To retiring/deceased partners capital a/c..

In case of goodwill of the deceased partner, the goodwill is divided according to his share or old ratio. The journal entry is the same

A profit and loss suspense a/c is made when the deceased partner is due his share of profit until the date of his death. it is calculated by multiplying the previous years profit (or whatever is specified in the question to be taken as base for profit) with the deceased partner share with the number of month the partner was active in the business.

eg: 80000 (last years profit) * 1/2 (partners share) * 6/12 ( the number of months the partner was active).

This amount is written in the deceased partners capital a/c in the credit side( if profit) or debit side ( if loss)