Death of Partner
By Asok Nadhani
24.1 Consequences of Death of
Partner
i)
Business
of a partnership firm may not come to an end due to death of a partner if other
partners agree to continue to run the business of the firm like retirement on
death of a partner.
ii)
On
death of a partner, Assets and Liabilities have to be revalued and the
resultant Profit or Loss has to be transferred to the Capital Accounts of all
partners including the deceased partner in the old profit sharing ratio.
iii)
Similarly
Goodwill is also dealt in same manner like retirement.
iv)
In
case of death of a partner, the firm would get the joint policy value (if any).
v)
In the
absence of agreement, the representatives of the deceased partner can receive,
at their option, interest at the rate of 6% per annum or the share of profits
earned for the amount due to the deceased partner.
24.2 Provisions regarding Death of a Partner
a)
A partnership
firm does not dissolve on the death of a partner.
b)
The legal
representative of the deceased partner is entitled from the firm amounts due on
account of the following:-
i.
Capital
standing on the credit on the date of death of the deceased partner.
ii.
Share
of Goodwill.
iii.
Share
out of the proceeds of the Joint Life Insurance Policy.
Note: If the firm has undertaken the insurance policy
severally on the life of each partner, the executor of deceased partner is
entitled to get not only a share out of the proceeds of the policy but also a
share out of the surrender values of the policies on the lives of other
partners. However the later part is applicable only when the entire premium paid
is charged to Profit & Loss A/c and the policy are not appearing in the
Books.
iv.
Share
of reserves and other undistributed profit.
v.
Share
in profit of the firm from beginning till the death date of his death.
vi.
Interest
on Capital from beginning till his death date.
vii.
The
Capital Account of deceased partner will be charged with his share of the
following amounts:-
a) Drawings and interest thereon from
beginning of the Accounting Year till his death date.
b) Loss on Revaluation of Assets and
Liabilities.
c) Loss in business from the beginning of the
Accounting Year till the date of his death.
24.3 Special transaction’s in
case of death of a partner
After the death of a partner, the following accounting
entries are passed-
i)
Joint
Life Policy.
ii)
Payment
of Deceased Partner’s Share.
24.3.1 Joint Life Policy:
a)
Joint
Life Policy is an insurance policy undertaken on the lives of all the partners.
The firm pays the premium and the amount of policy is payable to the firm on
the death of a Partner or on the maturity of the policy (whichever is earlier).
b)
If
Joint Life Policy appears in the Balance Sheet at surrender value, then the
firm will gain on the death of a partner.
c)
Surrender Value: It is the amount which an insurance
company is prepared to return to the policy holder if the policy is
surrendered.
d)
The
accounting treatment for the premium paid and the Joint Life Policy may be on
any of the following ways:
- Without taking surrender value into
account.
- Taking surrender value into account.
24.3.1.1 Without Taking
Surrender Value into Account
Under this method, premiums paid are charged to Profit and Loss
A/c. No Joint Life policy is opened in the books and nothing is shown in the
Balance Sheet.
Accounting
Entry:
|
Insurance Premium A/c
|
Dr.
|
(On payment of premium)
|
|
To Bank
|
|
|
|
Profit and Loss A/c
|
Dr.
|
(Amount of premium transferred to P/L A/c.)
|
|
To Insurance Premium A/c
|
|
|
|
Insurance Company/ Bank A/c
|
Dr.
|
(On amount received and distributed in their old psr )
|
|
To All Partners’ Capital
A/c
|
|
24.3.1.2
Taking Surrender value into Account
There are two methods
(a) Joint Life Policy Method
(b) Joint Life Policy Reserve method.
24.3.1.2.1 Joint Life Policy
Method: Under this method,
A Joint Life Policy Account is opened in the books. The premium is debited to
Joint Life Policy Account as and when paid. At the end of each year, the book
value of the policy is adjusted to its surrender value by transferring the
difference between the premium paid and the increase in the surrender value to
Profit and Loss Account. The policy will appear in the Balance Sheet at its Surrender Value on the assets
side.
Accounting
Entry:
|
Joint Life Policy A/c
|
Dr.
|
(On payment of premium)
|
|
To Bank
|
|
|
|
Profit and Loss A/c
|
Dr.
|
(Adjustment of book value of policy with its surrender value
transferred to P/L A/c.)
|
|
To Joint Life Policy A/c
|
|
|
|
Insurance Company/ Bank A/c
|
Dr.
|
(On amount received)
|
|
To All Partners’ Capital
A/c
|
|
|
24.3.1.2.2 Joint Life Policy
Reserve Method: Under this
method a joint Life Policy Account is opened in the books, to which the premium
are debited as and when paid. At the end of the year, an amount equal to annual
premium is debited to Profit and Loss Appropriation Account and credited to
Joint Life Policy Reserve Account. The book value of the policy is adjusted to
its surrender value by a transfer from Joint Life Policy Reserve Account. After
adjustment, the Joint Life Policy will appear on the assets side of the Balance
Sheet at surrender value and Joint Life Policy Reserve will appear in the
Balance Sheet, on the liabilities side.
Accounting
Entry:
|
Joint Life Policy A/c.
|
Dr.
|
(On Payment of premium)
|
|
To Bank A/c.
|
|
|
|
Profit and Loss A/c.
|
Dr.
|
(Reserved created with the amount of premium)
|
|
To Joint Life Policy
Reserve A/c.
|
|
|
|
Joint Policy Reserve
|
Dr.
|
(Excess of premium paid
and over surrender value or difference between the premiums paid and surrenders
value).
|
|
To Joint Life Policy A/c
|
|
|
|
Insurance Company/ Bank A/c
|
Dr.
|
(On maturity of the policy)
|
|
To All Partners’ Capital
A/c
|
|
|
So, JLP account and JLP Reserve
account will stand in the books at surrender value. On termination of policy, JLP
Reserve account will be transferred to JLP account or it may be credited to
partners’ capital accounts in profits sharing ratio.
Example:
P, Q and R are in partnership sharing profits and
losses at the ratio of 3:2:1. They took a Joint Life Policy of Rs.60,000 which
is appearing in the Balance Sheet at Rs.6,000 the surrender value. Now, if P
dies, the firm will receive Rs.60,000 from the insurance company. The Journal
entries will appear as follows:
|
Date
|
Particulars
|
|
Amounts
(Rs.)
|
Amounts
(Rs.)
|
|
|
Bank A/c
|
Dr.
|
60,000
|
|
|
|
To joint Life Policy A/c
|
|
|
60,000
|
|
|
(Policy value received from the insurance company on
P’s death.)
|
|
|
|
|
|
Joint Life Policy A/c
|
Dr.
|
54,000
|
|
|
|
To P’s Capital A/c [Rs.54,000 x 3/6]
|
|
|
27,000
|
|
|
To Q’s Capital A/c [Rs.54,000 x 2/6]
|
|
|
18,000
|
|
|
To R’s Capital A/c [Rs.54,000 x1/6]
|
|
|
9,000
|
|
|
(Excess of Policy value of Rs.60,000 over surrender
value of Rs.6,000 transferred to Partner’s Capital A/cs in profit sharing
ratio.)
|
|
|
|
|
However, it Joint
Life Policy does not appear in the Balance Sheet, then entry (b) is to be
passed for Rs.60,000 and it would appear as follows:
|
||||
|
|
Joint Life Policy A/c
|
Dr.
|
60,000
|
|
|
|
To P’s Capital A/c [Rs.60,000 x 3/6]
|
|
|
30,000
|
|
|
To Q’s Capital A/c[Rs.60,000 x 2/6]
|
|
|
20,000
|
|
|
To R’s Capital A/c [Rs.60,000 x 1/6]
|
|
|
10,000
|
24.3.2 Payment of Deceased
Partner’s Share
On death of a partner, payment of share of profit up
to the date of death is made to the executor of the deceased partner.
Example:
X, Y and Z are in partnership in XYZ sharing Profits
and Losses at the ratio 5:3:2. X died on 15th May, 2009 . The firm closes its
books of account as on 31st December every year. So the executor of
X is entitled for 5 ½ months profit. If X’s share is immediately paid off then
profit for 2005 can be taken as base for calculating 5 ½ th months profits in
2009. If XYZ earned Rs.1,20,000 in year 2008, then 5 ½ th months profit is (1,20,000
x 11/2)= Rs.55,000. X’s share comes to Rs.55,000 x (3/10)= Rs.27,500.
Journal entry:-
|
Date
|
Particulars
|
|
Amounts
(Rs.)
|
Amounts
(Rs.)
|
|
|
Profit and Loss Suspense A/c
|
Dr.
|
27,500
|
|
|
|
To X’s Capital A/c.
|
|
|
27,500
|
|
|
(Share of X 5 ½ th months profit in 2008 transferred
to his Capital Account on death.)
|
|
|
|
At the end of the year 2009, the Profit and Loss
Suspense A/c will be transferred to Profit and Loss A/c.
Example
(Capital Accounts and Balance
Sheet after Death of a Partner)
X, Y and Z are partners in a firm sharing profits and
losses in the ratio of 4:3:2 respectively. The Balance Sheet of XYZ on 31st December, 2009
was as follows:-
|
Liabilities
|
Amount
(Rs.)
|
Assets
|
Amount
(Rs.)
|
|
Creditors
|
3,000
|
Cash
|
2,000
|
|
Capitals:-
|
|
Debtors
|
10,000
|
|
X’s Capital
|
15,000
|
Stock
|
3,000
|
|
Y’s Capital
|
12,000
|
X’s Loan
|
5,000
|
|
Z’s Capital
|
10,000
|
Freehold Property
|
20,000
|
|
|
40,000
|
|
40,000
|
X died on 1st January, 2010 . Firm had a Joint Life
Insurance Policy of Rs.18,000. Its money was realized on 1st February, 2010 . Goodwill
is to be valued at 2 year’s purchase of the average of last 3 year’s profit.
The amount of capital and goodwill, etc., due to the deceased partner was paid
on 1st March, 2010 .
Deficiency of cash was made good by taking loan from the bank. The profits for
the last 3 years, 2007, 2008 and 2009 were Rs.7,000, Rs.9,000 and Rs.11,000
respectively. Prepare Capital Accounts of the partners and Balance Sheet of Y
and Z after making payment to the executors of X.
Solution:
The above problem can be solved in two ways.
A.
Only
deceased partner’s share of goodwill may be raised in the books or
B.
Full
value of goodwill can be raised in the books.
Working Note:
1.
Calculation of value of Goodwill:
|
3 years’ average profit
|
=
|
Rs.[7,000 + 9,000 + 11,000] /3
|
||
|
|
=
|
Rs.9,000
|
|
|
|
So, Value of Goodwill
|
=
|
Rs.9,000 x 2
|
=
|
Rs.18,000
|
2. Calculation of Bank loan to be raised-
Cash Account.
|
Dr.
|
|
|
Cr.
|
|
Particulars
|
Rs.
|
Particulars
|
Rs.
|
|
To Balance b/d
|
2,000
|
By X’s Executors A/c (amt. to be paid)
|
26,000
|
|
To Joint Life Policy A/c
|
18,000
|
(15,000 + 8,000 + 8,000 -5,000)
|
|
|
To Bank Loan A/c(Balancing figure)
|
6,000
|
|
|
|
|
26,000
|
|
26,000
|
(A.) if only deceased partner’s share of goodwill may
be raised in the books
Journal entries in the books
of the firm
|
|
|
|
|
Dr.
|
Cr.
|
|
Date
|
Particulars
|
|
L.F.
|
Amount
(Rs.)
|
Amount
(Rs.)
|
|
2010
|
Bank A/c
|
Dr.
|
|
18,000
|
|
|
Feb.1
|
To Joint Life Policy A/c
|
|
|
|
18,000
|
|
|
(The JLP money realized on death of X.)
|
|
|
|
|
|
Feb.1
|
Joint Life Policy A/c
|
Dr.
|
|
18,000
|
|
|
|
To X’s Capital A/c (Rs.18,000
x 4/9)
|
|
|
|
8,000
|
|
|
To Y’s Capital A/c(Rs.18,000
x 3/9)
|
|
|
|
6,000
|
|
|
To Z’s Capital A/c(Rs.18,000
x 2/9)
|
|
|
|
4,000
|
|
|
(The Joint Life Policy A/c transferred to Partners Capital A/c in old
profit sharing ratio.)
|
|
|
|
|
|
Feb.1
|
Goodwill A/c. [Rs.18,000 x 4/9th]
|
Dr.
|
|
8,000
|
|
|
|
To X’s Capital A/c.
|
|
|
|
8,000
|
|
|
(Only the share of Goodwill of X raised in the books and transferred
to his Capital A/c.)
|
|
|
|
|
|
March.1
|
X’s Capital A/c
|
Dr.
|
|
5,000
|
|
|
|
To X’s Loan A/c.
|
|
|
|
5,000
|
|
|
(X’s Loan A/c transferred to his Capital A/c.)
|
|
|
|
|
Partners
Capital Account
|
Dr.
|
|
|
|
|
|
|
Cr.
|
|||||
|
Date
|
Particulars
|
X
|
Y
|
Z
|
Date
|
Particulars
|
X
|
Y
|
Z
|
|||
|
|
|
Rs.
|
Rs.
|
Rs.
|
|
|
Rs.
|
Rs.
|
Rs.
|
|||
|
1.3.10
|
To X’s Loan A/c
|
5,000
|
-
|
-
|
1.3.10
|
By Balance b/d
|
15,000
|
12,000
|
10,000
|
|||
|
1.3.10
|
To X’s
Executors A/c [Wn. 2]
|
26,000
|
-
|
-
|
1.2.10
|
By Joint Life
Policy A/c
|
8,000
|
6,000
|
4,000
|
|||
|
|
To Balance c/d
|
-
|
18,000
|
14,000
|
1.2.10
|
By Goodwill A/c
|
8,000
|
-
|
-
|
|||
|
|
|
31,000
|
18,000
|
14,000
|
|
|
31,000
|
18,000
|
14,000
|
|||
Balance
Sheet
As
on 1st March, 2010
|
Liabilities
|
Amount
|
Amount
|
Assets
|
Amount
|
Amount
|
|
|
Rs.
|
Rs.
|
|
Rs.
|
Rs.
|
|
Creditors.
|
|
3,000
|
Goodwill
|
|
8,000
|
|
Bank Loan [W.N.2]
|
|
6,000
|
Freehold Property
|
|
20,000
|
|
Partners’ Capital:-
|
|
|
Stock
|
|
3,000
|
|
Y -
|
18,000
|
|
Sundry Debtors
|
|
10,000
|
|
Z -
|
14,000
|
|
|
|
|
|
|
|
32,000
|
|
|
|
|
|
|
41,000
|
|
|
41,000
|
(B.) Full
value of goodwill can be raised in the books.
Journal entries in the books
of the firm
|
|
|
|
|
Dr.
|
Cr.
|
|
Date
|
Particulars
|
|
L.F.
|
Amount
(Rs.)
|
Amount
(Rs.)
|
|
2010
|
Bank A/c
|
Dr.
|
|
18,000
|
|
|
Feb.1
|
To Joint Life Policy A/c.
|
|
|
|
18,000
|
|
|
(The JLP money realized on death of X.)
|
|
|
|
|
|
Feb.1
|
Joint Life Policy A/c.
|
Dr.
|
|
18,000
|
|
|
|
To X’s Capital A/c.
|
|
|
|
8,000
|
|
|
To Y’s Capital A/c.
|
|
|
|
6,000
|
|
|
To Z’s Capital A/c.
|
|
|
|
4,000
|
|
|
(The Joint Life Policy A/c transferred to Partners Capital A/c in old
profit sharing ratio.)
|
|
|
|
|
|
Feb.1
|
Goodwill A/c. [W.N. – 1]
|
Dr.
|
|
18,000
|
|
|
|
To X’s Capital A/c (Rs.18,000
x 4/9)
|
|
|
|
8,000
|
|
|
To Y’s Capital A/c(Rs.18,000
x 3/9)
|
|
|
|
6,000
|
|
|
To Z’s Capital A/c(Rs.18,000
x 2/9)
|
|
|
|
4,000
|
|
|
(The full value of Goodwill raised in the books and transferred to
particulars Capital A/c on the death of X.)
|
|
|
|
|
|
|
X’s Capital A/c
|
Dr.
|
|
5,000
|
|
|
|
To X’s Loan A/c.
|
|
|
|
5,000
|
|
|
(X’s Loan transferred to X’s Capital A/c.)
|
|
|
|
|
Partners
Capital Account
|
Dr.
|
|
|
|
|
|
|
Cr.
|
|||||
|
Date
|
Particulars
|
X
|
Y
|
Z
|
Date
|
Particulars
|
X
|
Y
|
Z
|
|||
|
|
|
Rs.
|
Rs.
|
Rs.
|
|
|
Rs.
|
Rs.
|
Rs.
|
|||
|
1.3.10
|
To X’s Loan A/c
|
5,000
|
-
|
-
|
1.3.10
|
By Balance b/d
|
15,000
|
12,000
|
10,000
|
|||
|
1.3.10
|
To X’s
Executors A/c [Wn. 2]
|
26,000
|
-
|
-
|
1.2.10
|
By Joint Life
Policy A/c
|
8,000
|
6,000
|
4,000
|
|||
|
|
To Balance c/d
|
-
|
24,000
|
18,000
|
1.2.10
|
By Goodwill A/c
|
8,000
|
6,000
|
4,000
|
|||
|
|
|
31,000
|
24,000
|
18,000
|
|
|
31,000
|
24,000
|
18,000
|
|||
Balance Sheet
As on 1st March, 2010 .
|
Liabilities
|
Amount
|
Amount
|
Assets
|
Amount
|
Amount
|
|
|
Rs.
|
Rs.
|
|
Rs.
|
Rs.
|
|
Creditors.
|
|
3,000
|
Goodwill
|
|
18,000
|
|
Bank Loan [W.N. – 2]
|
|
6,000
|
Freehold Property
|
|
20,000
|
|
Partners’ Capital
|
|
|
Stock
|
|
3,000
|
|
X -
|
24,000
|
|
Sundry Debtors
|
|
10,000
|
|
Y -
|
18,000
|
|
|
|
|
|
|
|
42,000
|
|
|
|
|
|
|
51,000
|
|
|
51,000
|
Example
(Joint Life Insurance Policy
Account in Cash of a Partner)
P and Q share profits in the ratio of 5:3. They took a
Joint Life insurance policy of Rs.50,000 on Jan. 1, 2006 for 10 years and paid Premium @
Rs.5,000 per year. On March. 15, 2009 Q died but policy was received on April.
30, 2009. Following were the surrender values:
2006 – Nil
2007 – Rs.1,500
2008 – Rs.3,000
Show journal entries and Joint Life Insurance Policy
Account and Joint Life Insurance Policy Reserve Account.
Solution:
In the books of the firm
Journal Entries
|
Date
|
Particulars
|
|
Amounts
(Rs.)
|
Amounts
(Rs.)
|
|
2006
|
Joint Life Policy A/c
|
Dr.
|
5,000
|
|
|
Jan.1
|
To Bank A/c
|
|
|
5,000
|
|
|
(Insurance premium paid.)
|
|
|
|
|
Dec.31
|
Profit & Loss A/c
|
Dr.
|
5,000
|
|
|
|
To Joint Life Policy Reserve A/c
|
|
|
5,000
|
|
|
(Reserve created against premium.)
|
|
|
|
|
Dec.31
|
Joint Life Policy Reserve A/c
|
Dr.
|
5,000
|
|
|
|
To Joint Life Policy A/c
|
|
|
5,000
|
|
|
(The adjustment made.)
|
|
|
|
|
2007
|
Joint Life Policy A/c
|
Dr.
|
5,000
|
|
|
Jan.1
|
To Bank A/c
|
|
|
5,000
|
|
|
(Insurance premium paid.)
|
|
|
|
|
Dec.31
|
Profit & Loss A/c
|
Dr.
|
5,000
|
|
|
|
To Joint Life Policy Reserve A/c
|
|
|
5,000
|
|
|
(Reserve created against premium.)
|
|
|
|
|
Dec.31
|
Joint Life Policy Reserve A/c
|
Dr.
|
3,500
|
|
|
|
To Joint Life Policy A/c Rs.(5,000 -1,500)
|
|
|
3,500
|
|
|
(The adjustment
of excess of joint life policy over surrender value.)
|
|
|
|
|
2008
|
Joint Life Policy A/c
|
Dr.
|
5,000
|
|
|
Jan.1
|
To Bank A/c
|
|
|
5,000
|
|
|
(Insurance premium paid.)
|
|
|
|
|
Dec.31
|
Profit & Loss A/c
|
Dr.
|
5,000
|
|
|
|
To Joint Life Policy Reserve A/c
|
|
|
5,000
|
|
|
(Reserve created against premium.)
|
|
|
|
|
Dec.31
|
Joint Life Policy Reserve A/c
|
Dr.
|
3,500
|
|
|
|
To Joint Life Policy A/c Rs.(5,000 +1,500
– 3,000)
|
|
|
3,500
|
|
|
(The adjustment
of excess of joint life policy over surrender value.)
|
|
|
|
|
2009
|
Joint Life Policy A/c
|
Dr.
|
5,000
|
|
|
Jan.1
|
To Bank A/c
|
|
|
5,000
|
|
|
(Insurance premium paid.)
|
|
|
|
|
Apr.30
|
Bank A/c
|
Dr.
|
50,000
|
|
|
|
To Joint Life Policy A/c
|
|
|
50,000
|
|
|
(Joint Life Policy amount received on death of Q)
|
|
|
|
|
Apr.30
|
Joint Life Policy Reserve A/c
|
Dr.
|
3,000
|
|
|
|
To Joint Life Policy A/c [Note 2]
|
|
|
3,000
|
|
|
(Balance of Joint
Life Policy Reserve transferred to Joint Life Policy A/c.)
|
|
|
|
|
Apr.30
|
Joint Life Policy
A/c [Note 1]
|
Dr.
|
45,000
|
|
|
|
To P’s Capital A/c (Rs.45,000 x 5/8)
|
|
|
28,125
|
|
|
To Q’s Capital A/c (Rs.45,000 x 3/8)
|
|
|
16,875
|
|
|
(Closing Balance
of Joint Life Policy A/c is transferred to Partners’ Capital A/c in their old
psr.)
|
|
|
|
Joint Life Insurance Policy
Account
|
Dr.
|
|
|
|
|
Cr.
|
|
Date
|
Particulars
|
Amount
(Rs.)
|
Date
|
Particulars
|
Amount
(Rs.)
|
|
2006
|
|
|
2006
|
|
|
|
Jan. 1
|
To Bank A/c
|
5,000
|
Dec. 31
|
By JLIP Reserve A/c
|
5,000
|
|
|
|
5,000
|
|
|
5,000
|
|
2007
|
|
|
2007
|
|
|
|
Jan. 1
|
To Bank A/c
|
5,000
|
Dec. 31
|
By JLIP Reserve A/c(5,000-1,500)
|
3,500
|
|
|
|
|
Dec. 31
|
By Balance c/d
|
1,500
|
|
|
|
5,000
|
|
|
5,000
|
|
2008
|
|
|
2008
|
|
|
|
Jan. 1
|
To Balance b/d
|
1,500
|
Dec. 31
|
By JLIP Reserve A/c(6,500-3,000)
|
3,500
|
|
Jan. 1
|
To Bank A/c
|
5,000
|
Dec. 31
|
By Balance c/d
|
3,000
|
|
|
|
6,500
|
|
|
6,500
|
|
2009
|
|
|
2009
|
|
|
|
Jan. 1
|
To Balance b/d
|
3,000
|
Apr. 30
|
By Bank A/c (policy amt. received)
|
50,000
|
|
Jan. 1
|
To Bank A/c
|
5,000
|
Apr. 30
|
By JLIP Reserve A/c (transferred amount)
|
3,000
|
|
Apr. 30
|
To P’s Capital A/c.[Note 1]
|
28,125
|
|
|
|
|
Apr. 30
|
To Q’s Capital A/c.
|
16,875
|
|
|
|
|
|
|
53,000
|
|
|
53,000
|
Note 1:
|
|
Rs.
|
|
|
Insurance policy received
|
50,000
|
|
|
transferred from JLIP Reserve
|
3,000
|
|
|
|
53,000
|
|
|
Less: Opening
bal. of JLI Policy
|
3,000
|
|
|
Premium paid for 2009
|
5,000
|
|
|
|
|
8,000
|
|
It will be shared
in the ratio of 5:3
|
45,000
|
|
|
P = (45,000 x 5/8) =
|
28,125
|
|
|
Q = (45,000 x 3/8) =
|
16,875
|
|
Joint Life Insurance Policy
Reserve Account
|
Dr.
|
|
|
|
|
Cr.
|
|
Date
|
Particulars
|
Amount
(Rs.)
|
Date
|
Particulars
|
Amount
(Rs.)
|
|
2006
|
|
|
2006
|
|
|
|
Dec. 31
|
To Joint Life Insurance Policy A/c
|
5,000
|
Dec. 31
|
By Profit & Loss A/c
|
5,000
|
|
|
|
5,000
|
|
|
5,000
|
|
2007
|
|
|
2007
|
|
|
|
Dec. 31
|
To Joint Life Insurance Policy A/c
|
3,500
|
Dec. 31
|
By Profit & Loss A/c
|
5,000
|
|
Dec. 31
|
To Balance c/d
|
1,500
|
|
|
|
|
|
|
5,000
|
|
|
5,000
|
|
2008
|
|
|
2008
|
|
|
|
Dec. 31
|
To Joint Life Insurance Policy A/c
|
3,500
|
Dec. 31
|
By Balance b/d
|
1,500
|
|
Dec. 31
|
To Balance c/d
|
3,000
|
Dec. 31
|
By Profit & Loss A/c
|
5,000
|
|
|
|
6,500
|
|
|
6,500
|
|
2009
|
|
|
2009
|
|
|
|
Apr. 30
|
To Joint Life Insurance Policy A/c
|
3,000
|
Jan. 1
|
By Balance b/d
|
3,000
|
|
|
(Transfer of Closing Balance.) [Note 2]
|
|
|
|
|
|
|
|
3,000
|
|
|
3,000
|
Note 2: At the time of
realization of Joint Life Policy on the death of Q, the JLIP Reserve A/c has been
closed by transferring its closing balance to JLI Policy A/c for the purpose of
distribution to the partners in their old profit sharing ratio.
