On the death of a partner, the amount of joint life policy should be credited to the capital account of _________.
On the death of a partner, the amount of joint life policy should be credited to the capital account of _________.
The correct option is B all partners including the deceased partner in their old profit sharing ratio
A Joint Life Policy (JLP) is an insurance policy that is taken by the partnership firm on the joint lives of all partners. The amount of the policy is payable by the insurance company either on the death of a partner or maturity of the policy, whichever is earlier. The firm pays an annual premium to the insurer against the policy.
On the death of a partner following entries are passed:
- Bank A/c Dr.
To Joint Life Policy A/c
(policy value received from the insurance company on partner’s death)
- Joint Life policy A/c Dr.
To All partner’s capital A/c (separately)
Therefore, on the death of a partner, the amount of joint life policy should be credited to the capital account of all partners, including the deceased partner, in their old profit sharing ratio.
A Joint Life Policy (JLP) is an insurance policy that is taken by the partnership firm on the joint lives of all partners. The amount of the policy is payable by the insurance company either on the death of a partner or maturity of the policy, whichever is earlier. The firm pays an annual premium to the insurer against the policy.
On the death of a partner following entries are passed:
- Bank A/c Dr.
To Joint Life Policy A/c
(policy value received from the insurance company on partner’s death)
- Joint Life policy A/c Dr.
To All partner’s capital A/c (separately)
Therefore, on the death of a partner, the amount of joint life policy should be credited to the capital account of all partners, including the deceased partner, in their old profit sharing ratio.
