why we make entry of pnl suspense account in balance sheet at the time of death of a partner

Dear student Profit & Loss suspense account appears in the firm s balance sheet at the date of a partner's death This is because If the death of a partner occurs on any day during the year, the executors of the deceased partner will also be entitled to the share of profits earned by the firm from the beginning of the year till the date of the death. It is used to record some fictitious profits for the purpose of settlement of share of profits to a deceased partner. After ascertaining deceased partner’s share in profits till the date of death, such profits are credited to his capital a/c and the following entry is passed: Profit & Loss Suspense A/c Dr. To Deceased Partner’s Capital A/c (In case of loss, reverse entry is passed) Profit & Loss Suspense A/c will appear on asset side of Balance Sheet (If B/S prepared on the date of death). It will be closed by transferring to Profit & Loss Appropriation A/c at the end of year. Regards

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