AccountsISC Class 12 · Reconstitution of Partnership: Retirement and Death

Deceased Partner's Share and Executor's Account: ISC Class 12 Accounts

Updated 15 October 2026 · Fact-checked

When a partner dies, his capital account is credited with everything due to him up to the date of death, including his share of profit to that date on a time or turnover basis, and debited with drawings and losses. The balance is transferred to his Executor's Account and paid in cash or kept as the executor's loan with interest.

Understand Deceased Partner's Share and Executor's Account

Death is retirement on an unplanned date. The deceased partner's capital account is settled exactly like a retiring partner's: capital, share of reserves, revaluation result, goodwill, interest on capital and salary, less drawings and interest on drawings. The two extra features are the profit to the date of death and the executor.

Profit to the date of death. Death rarely falls on the Balance Sheet date, so his share of profit for the broken period is estimated:

Time basis: last year's (or average) profit × months to death ÷ 12 × his share.
Turnover basis: sales from the last Balance Sheet date to death × (last year's profit ÷ last year's sales) × his share.

Which account is debited? The syllabus is specific:

If the surviving partners continue in their old ratio between themselves: Profit and Loss Suspense A/c Dr; To Deceased Partner's Capital A/c. The suspense account is closed to the P&L Account at the year end.
If their ratio changes: the gaining partners' capital or current accounts are debited in the gaining ratio.

Time-proportion items. Interest on capital, salary and interest on drawings run only up to the date of death. ISC examiners in 2025 noted candidates calculating salary and interest for twelve months instead of four.

Goodwill. His share is credited to his capital and debited to the surviving partners who gain (By Surviving Partner's Capital A/c, not 'By Goodwill'). Goodwill already in the books is written off among all partners in the old ratio, so only his share of it is debited to him.

Executor. The closing balance goes to: Deceased Partner's Capital A/c Dr; To His Executor's A/c. If not paid at once, it becomes the Executor's Loan A/c. Interest accrued but not due on the Balance Sheet date is credited and carried down; interest accrued and due is paid with each instalment.

Exclusions. Joint Life Policy and Individual Life Policy are outside the ISC syllabus.

Deceased Partner's Share and Executor's Account: key facts

Profit to date of death (time basis): Base profit × Months to death ÷ 12 × Deceased partner's share; Base profit: last year's or average profit, as the question states.
Profit to date of death (turnover basis): Sales to date of death × (Last year's profit ÷ Last year's sales) × Deceased partner's share
Account debited for his profit share: Ratio unchanged: P&L Suspense A/c | Ratio changed: Gaining partners' Capital A/cs
Amount due to executor: Capital + Reserves + Revaluation profit + Goodwill + Interest, salary and profit to death − Drawings − Interest on drawings − Losses; Balance transferred to Executor's A/c.
Executor's loan payment: Instalment + Interest accrued (carried down) + Interest for the current period; Interest on the unpaid balance only.

How to answer Deceased Partner's Share and Executor's Account questions

ISC death questions often combine a capital account with an interim Balance Sheet. Fix the date of death first; every time item depends on it.

1Count the months from the last Balance Sheet date to the date of death.
2Calculate interest on capital, salary and interest on drawings for those months only.
3Estimate his profit to date on the basis stated and decide: P&L Suspense or gaining partners.
4Post reserves, the revaluation result and goodwill write-off in the old ratio; credit his share of goodwill from the gaining partners.
5Close his capital to Executor's A/c; prepare the Executor's Loan A/c with dates and interest if asked.
6If a Balance Sheet is asked, show P&L Suspense on the assets side and the executor's balance as a liability, in horizontal format.

Deceased Partner's Share and Executor's Account in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Profit to the date of death on time basis

Suppose three friends run a home bakery and share profits equally. Last year the bakery made ₹36,000. Four months into the new year one friend dies, and her family asks for her share of what the bakery earned while she was working.

Estimate her share of profit for those four months on a time basis.

Try it first, then show the solutionSolution

Profit for four months = ₹36,000 × 4/12 = ₹12,000.
Her one-third share = ₹4,000.

Answer: Her family is credited with ₹4,000 as her share of profit to the date of death.

Memory hook: Months worked, months paid.

Tricks to remember Deceased Partner's Share and Executor's Account

Short memory aids. Say each one aloud once, then use it on a question the same day.

Same ratio, Suspense; new ratio, gainers
If the survivors keep their old ratio, use P&L Suspense; if it changes, debit whoever gains.
Use it when: Choosing the debit for profit to date.
Stop the clock at death
Interest, salary and interest on drawings all stop on the date of death.
Use it when: Avoiding twelve-month calculations.
Goodwill from people, not from an account
Credit the deceased 'By Surviving Partners' Capital A/cs', never 'By Goodwill'.
Use it when: Goodwill compensation entries.

Deceased Partner's Share and Executor's Account: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Account debited for profit to date · 1 mark · MCQBoard level

A partner dies and the surviving partners continue to share profits in their old ratio. His share of profit to the date of death is debited to:
(a) Profit and Loss Suspense Account
(b) Revaluation Account
(c) Gaining partners' capital accounts
(d) Realisation Account

Try it first, then show the solutionSolution

The survivors' ratio is unchanged, so no one gains disproportionately.
The syllabus uses P&L Suspense in this case.

Answer: (a) Profit and Loss Suspense Account

Example 2: Time basis · 3 marks · Short answerBoard level

Neel, Om and Pari share profits 4:3:1. Om dies on 31 August 2025; the books close on 31 March. Last year's profit was ₹1,92,000. Calculate Om's share of profit to the date of death and pass the entry, assuming Neel and Pari keep their old ratio. (3 marks)

Try it first, then show the solutionSolution

Months from 1 April to 31 August = 5.
Profit = 1,92,000 × 5/12 × 3/8 = ₹30,000.
P&L Suspense A/c Dr 30,000; To Om's Capital A/c 30,000.

Answer: Om's share = ₹30,000, debited to P&L Suspense A/c.

Example 3: Turnover basis · 3 marks · Short answerHarder board level

Last year a firm's sales were ₹12,00,000 and profit ₹1,50,000. A partner with a two-fifths share dies on 30 September; sales from 1 April to that date were ₹5,60,000. Calculate his share of profit to the date of death. (3 marks)

Try it first, then show the solutionSolution

Profit rate = 1,50,000 ÷ 12,00,000 = 12.5% of sales.
Profit to death = 5,60,000 × 12.5% = ₹70,000.
His share = 70,000 × 2/5 = ₹28,000.

Answer: His share of profit = ₹28,000.

Example 4: Deceased partner's capital account · 6 marks · Long answerHarder board level

Rhea, Sam and Tara share profits 5:3:2. Sam dies on 30 June 2025; the books close on 31 March. Sam's capital on 1 April was ₹1,40,000; interest on capital is 10% p.a. and his salary ₹2,000 a month. His drawings were ₹12,000 with interest of ₹300. General Reserve is ₹60,000; goodwill of ₹30,000 appears in the books and is to be written off; the firm's goodwill is now valued at ₹1,40,000; revaluation shows a loss of ₹8,000. His profit to date is based on the average profit of ₹1,80,000. Rhea and Tara continue in their old ratio. Calculate the amount due to Sam's executor and the goodwill entry. (6 marks)

Try it first, then show the solutionSolution

Three months: interest 1,40,000 × 10% × 3/12 = ₹3,500; salary ₹6,000.
Sam's share 3/10: reserve ₹18,000; existing goodwill written off ₹9,000 (Dr); revaluation loss ₹2,400 (Dr); profit to date 1,80,000 × 3/12 × 3/10 = ₹13,500 (via P&L Suspense).
Goodwill share = 1,40,000 × 3/10 = ₹42,000: Rhea's Capital Dr 30,000; Tara's Capital Dr 12,000 (gaining ratio 5:2); To Sam's Capital 42,000.
Credits = 1,40,000 + 3,500 + 6,000 + 18,000 + 42,000 + 13,500 = ₹2,23,000.
Debits = 9,000 + 2,400 + 12,000 + 300 = ₹23,700; balance to executor ₹1,99,300.

Answer: Amount due to Sam's executor = ₹1,99,300; goodwill: Rhea ₹30,000 and Tara ₹12,000 Dr, Sam ₹42,000 Cr.

Example 5: Executor's loan account across two years · 6 marks · Long answerHOTS / competency

₹2,16,000 is due to a deceased partner's executor on 31 December 2025. ₹36,000 is paid at once and the balance is payable in three equal annual instalments from 31 December 2026, with interest at 8% p.a. on the unpaid balance. The books close on 31 March. Calculate the interest credited on 31 March 2026, the payment on 31 December 2026 and the balance carried down on 31 March 2027. (6 marks)

Try it first, then show the solutionSolution

Loan = 2,16,000 − 36,000 = ₹1,80,000.
31 Mar 2026: 1,80,000 × 8% × 3/12 = ₹3,600 accrued, not due; c/d ₹1,83,600.
31 Dec 2026: interest April to December = 1,80,000 × 8% × 9/12 = ₹10,800; payment = 60,000 + 3,600 + 10,800 = ₹74,400; balance ₹1,20,000.
31 Mar 2027: 1,20,000 × 8% × 3/12 = ₹2,400; c/d ₹1,22,400.

Answer: Interest ₹3,600 (31 March 2026); payment ₹74,400 (31 December 2026); balance c/d ₹1,22,400 (31 March 2027).

Example 6: Profit to date when the survivors change their ratio · 3 marks · Short answerHOTS / competency

Uday, Vani and Wasim share profits 3:2:1. Wasim dies; his share of profit to the date of death is ₹9,000. Uday and Vani will now share equally. Pass the entry. (3 marks)

Try it first, then show the solutionSolution

Ratio changes, so use the gaining ratio, not P&L Suspense.
Uday: 1/2 − 3/6 = 0; Vani: 1/2 − 2/6 = 1/6. Only Vani gains.
Vani's Capital A/c Dr 9,000; To Wasim's Capital A/c 9,000.

Answer: Vani's Capital A/c Dr ₹9,000; To Wasim's Capital A/c ₹9,000. Uday is not debited because he gains nothing.

Where students lose marks in Deceased Partner's Share and Executor's Account

The slips examiners see most often, and what to write instead.

Mistake: Twelve months of interest and salary
Ignoring the date of death.
Wrong working
Salary 2,000 × 12 = 24,000
Right working
Salary 2,000 × 3 = 6,000
Do this: Count months to death; ISC examiners in 2025 reported this error.
Usually costs: 1-2 marks.
Mistake: 'By Goodwill' in the deceased's account
Raising goodwill instead of compensating through partners.
Wrong working
By Goodwill A/c 42,000
Right working
By Rhea's Capital 30,000; By Tara's Capital 12,000
Do this: Name the surviving partners' capital accounts, as 2025 examiners advised.
Usually costs: 1 mark.
Mistake: Debiting the whole existing goodwill to the deceased
Forgetting it is written off among all partners.
Wrong working
To Goodwill 30,000 (Sam)
Right working
To Goodwill 9,000 (Sam's 3/10)
Do this: Write off book goodwill in the old ratio; debit him only his share.
Usually costs: 1 mark.
Mistake: Using P&L Suspense when the ratio changes
Applying one rule to every case.
Wrong working
P&L Suspense Dr 9,000
Right working
Vani's Capital Dr 9,000
Do this: Check whether the survivors' ratio changes before choosing the debit.
Usually costs: 1 mark.

Exam tips

Write 'Months to death = …' as the first working note.
Write 'Balance b/d' against the opening capital and 'Balance c/d' only for a balance carried forward; examiners in 2025 noted these were mixed up.
In an interim Balance Sheet, show P&L Suspense on the assets side.
Date every entry in the Executor's Loan A/c.

Practice questions on Deceased Partner's Share and Executor's Account

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
The amount due to a deceased partner is transferred to:
(a) Realisation Account
(b) his Executor's Account
(c) Profit and Loss Suspense Account
(d) the surviving partners' Capital Accounts
Hint
Who now represents him?
Answer
(b) his Executor's Account
Q2 · 1 mark · MCQBoard level
If the surviving partners change their profit-sharing ratio, the deceased partner's share of profit to the date of death is debited to:
(a) P&L Suspense Account
(b) all partners in the old ratio
(c) the gaining partners' Capital Accounts
(d) Revaluation Account
Hint
Who benefits from the new ratio?
Answer
(c) the gaining partners' Capital Accounts
Q3 · 3 marks · Short answerBoard level
Last year's profit was ₹2,16,000. A partner with a one-fourth share dies on 31 October; the books close on 31 March. Calculate his share of profit to the date of death on a time basis. (3 marks)
Hint
Seven months.
Answer
2,16,000 × 7/12 × 1/4 = ₹31,500.
Q4 · 3 marks · Short answerHarder board level
Last year's turnover was ₹18,00,000 and profit ₹2,70,000. Turnover from 1 April to 31 July, the date of a partner's death, was ₹7,20,000. His share is one-third. Calculate his share of profit to the date of death. (3 marks)
Hint
Profit is 15% of turnover.
Answer
7,20,000 × 15% = 1,08,000; one-third = ₹36,000.
Q5 · 3 marks · Short answerHarder board level
A firm's profits for the last three years were ₹1,20,000, ₹1,50,000 and ₹1,80,000. A partner with a two-fifths share dies on 30 September; the books close on 31 March. His share of profit to date is based on average profit. Calculate it. (3 marks)
Hint
Average first, then six months.
Answer
Average = ₹1,50,000; 1,50,000 × 6/12 × 2/5 = ₹30,000.
Q6 · 3 marks · Short answerHarder board level
A partner dies on 31 May; the books close on 31 March. His capital is ₹2,40,000 with interest at 6% p.a., and his salary is ₹4,000 a month. Calculate the total of interest and salary credited to him. (3 marks)
Hint
Two months only.
Answer
Interest 2,40,000 × 6% × 2/12 = ₹2,400; salary ₹8,000; total ₹10,400.
Q7 · 1 mark · Assertion-reasonHarder board level
Assertion (A): A deceased partner's share of profit up to the date of death is credited to his capital account.
Reason (R): He was a partner and shared the firm's work and risk until that date.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.
Hint
Why does he earn it?
Answer
(a) Both A and R are true, and R is the correct explanation of A.
Q8 · 6 marks · Long answerHarder board level
₹1,00,000 due to an executor is transferred to the Executor's Loan A/c on 1 July 2025 with interest at 9% p.a. ₹50,000 and all interest due are paid on 30 June 2026. The books close on 31 March. Calculate the interest credited on 31 March 2026 and the payment on 30 June 2026. (6 marks)
Hint
Nine months, then three months.
Answer
31 March 2026: 1,00,000 × 9% × 9/12 = ₹6,750 (c/d ₹1,06,750). 30 June 2026: interest ₹2,250; payment 50,000 + 6,750 + 2,250 = ₹59,000; balance ₹50,000.
Q9 · 6 marks · Long answerHOTS / competency
A partner with a one-third share dies on 31 December; the books close on 31 March. His capital is ₹90,000 with interest at 6% p.a.; drawings ₹13,000. Turnover since 1 April is ₹6,00,000 and profit is 10% of turnover. Advertisement Suspense of ₹12,000 appears in the books, and the firm's goodwill is ₹54,000. Calculate the amount due to his executor. (6 marks)
Hint
Nine months of interest; Advertisement Suspense is a loss.
Answer
90,000 + interest 4,050 + profit 20,000 + goodwill 18,000 − drawings 13,000 − Advertisement Suspense 4,000 = ₹1,15,050.
Q10 · 3 marks · Short answerHOTS / competency
A student writes 'By Goodwill A/c 12,000' in a deceased partner's capital account, although the question says goodwill is not to appear in the books. Explain the error and write the correct credit. (3 marks)
Hint
Who pays him for goodwill?
Answer
Goodwill is not raised, so there is no Goodwill A/c. The surviving partners who gain his share compensate him: 'By [Gaining Partners'] Capital A/cs 12,000' in the gaining ratio.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.Two bases for estimating profit to the date of death?Show answer
Time and turnover.
2.Where does P&L Suspense appear in an interim Balance Sheet?Show answer
On the assets side.
3.Last year's profit ₹60,000; death after 3 months; share 1/2: profit to date?Show answer
₹7,500.
4.Account credited with the deceased partner's closing balance?Show answer
His Executor's Account.
5.Is Joint Life Policy in the ISC syllabus?Show answer
No, it is excluded.

Deceased Partner's Share and Executor's Account: frequently asked questions

How is P&L Suspense Account closed?

At the end of the year it is transferred to the Profit and Loss Account, so the surviving partners bear the deceased partner's share out of the full year's profit.

Which basis should I use if the question gives both turnover and time data?

Use the basis the question names. If it gives only sales figures for the broken period, it expects the turnover basis.

Is interest on the executor's loan a charge against profit?

Yes. The executor is a creditor of the firm, so interest is an expense, not an appropriation.

Can the executor be paid partly at once and partly later?

Yes. Credit Bank for the amount paid and the Executor's Loan A/c for the balance.