Q.X, Y and Z were partners sharing profits and losses equally. X died on 1st April 2019. Find out the share of X in the profit of 2019 based on the profit of 2018 which showed ₹ 36,000.

The unpaid balance due to a retiring partner is transferred to his Loan Account.

On retirement, the balance in the retiring partner's capital account (after all adjustments) shows the total sum due to him (Retirement and Death of a Partner, TN HSC Commerce). If the firm cannot pay it immediately, the amount is not left in the capital account — it is converted into a liability by transferring it to the Retiring Partner's Loan A/c, which is then paid off (often with interest) in ag …

If the amount due to a retiring partner is not paid immediately, it is transferred to the Retiring Partner's Loan A/c — option (a).

In the Retirement and Death of a Partner topic of the TN HSC Commerce syllabus, once the total amount due to the retiring partner is settled through his Capital Account, it can be discharged in three ways: paid fully in cash, paid partly in cash and the balance kept as a loan, or kept entirely as a loan.

When the firm cannot (or does not) pay the amount immediately, the outstanding balance is transferred out of his Capital Account to a Retiring Partner's Loan Account. The entry is:

Retiring Partner's Capital A/c Dr.

To Retiring Partner's Loan A/c

…

X's profit share to the date of death = ₹36,000 × 1/3 × 3/12 = ₹3,000 — option (c).

X, Y and Z shared profits equally, so X's share is 1/3. X died on 1 April 2019, meaning 3 months of 2019 had elapsed (January, February, March). The deceased partner's share of profit up to death is estimated using the previous year's (2018) profit of ₹36,000.

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