Executor's Account in Death of a Partner: Format and Entries

Death of a partner is one of those partnership topics where students often understand the adjustments but get confused at the last step.

They can calculate goodwill. They can pass revaluation entries. They can distribute reserves. They may even calculate profit up to the date of death correctly. But then the question asks for the Executor’s Account, and suddenly the answer feels unfamiliar.

The good news is that Executor’s Account is not a new type of adjustment. It is the settlement account.

The firm first calculates the total amount due to the deceased partner. Then that amount is transferred to the executor or legal representative of the deceased partner. The Executor’s Account simply shows how that final amount is settled.

Once you keep this one line in mind, the whole topic becomes much calmer.

Who Is an Executor in Partnership Accounts?

An executor is the person who represents the deceased partner’s estate. In many school questions, the word legal representative may also be used.

In simple words, after a partner dies, the firm cannot pay the deceased partner directly. It has to settle the amount with the person legally entitled to receive it on behalf of that partner.

That is why we open an account such as:

Deceased Partner's Executor's Account

If the deceased partner is C, the account may be written as:

C's Executor's Account

The name may look formal, but the purpose is simple. It records the amount payable to C’s executor and the payments made by the firm.

Why Executor’s Account Is Needed

When a partner dies, the partner’s claim in the firm does not disappear. The firm must calculate and settle it.

That claim may include:

Amounts usually added to the deceased partner’s claim	Amounts usually deducted from the claim
Capital balance	Drawings
Share of goodwill	Interest on drawings
Share of revaluation profit	Share of revaluation loss
Share of reserves and accumulated profits	Share of accumulated losses
Interest on capital, if allowed	Any amount already withdrawn or adjusted
Salary or commission, if allowed
Share of profit till date of death

All these items are first collected in the deceased partner’s capital account.

After that, the final balance is transferred to the Executor’s Account.

Capital Account and Executor’s Account: The Difference

This is the most important difference in the topic.

Account	Main purpose
Deceased Partner’s Capital Account	To calculate the final amount due to the deceased partner
Deceased Partner’s Executor’s Account	To record payment or unpaid balance payable to the executor

Think of it like this:

The capital account is the calculation sheet.

The Executor’s Account is the settlement sheet.

If the question asks only for the deceased partner’s capital account, you may still have to show the transfer to the executor as the closing item. If the question asks for Executor’s Account also, you must show what happens after that transfer.

Step-by-Step Order in a Death of Partner Question

A full question becomes easier when you follow the same order every time.

Step	What to do
1	Read the old profit sharing ratio and the deceased partner’s name
2	Calculate the new ratio and gaining ratio, if needed
3	Treat goodwill as instructed
4	Prepare Revaluation Account, if assets and liabilities are revalued
5	Distribute reserves, accumulated profits, and accumulated losses
6	Calculate profit or loss up to the date of death, if required
7	Record interest on capital, salary, commission, drawings, and interest on drawings, if given
8	Prepare the deceased partner’s capital account
9	Transfer the final amount due to the Executor’s Account
10	Prepare the Executor’s Account and record payment, instalments, or closing balance

This order prevents the most common mistake: settling the executor before all adjustments have reached the deceased partner’s capital account.

Journal Entry for Transfer to Executor’s Account

After all adjustments, the deceased partner’s capital account will show the amount due.

The entry for transferring that amount is:

Particulars	Debit	Credit
Deceased Partner’s Capital A/c Dr.	Amount due
To Deceased Partner’s Executor’s A/c		Amount due

If C is the deceased partner and Rs. 1,20,000 is due to C, the entry is:

Particulars	Debit	Credit
C’s Capital A/c Dr.	Rs. 1,20,000
To C’s Executor’s A/c		Rs. 1,20,000

This closes C’s Capital Account and creates a liability towards C’s executor.

Format of Deceased Partner’s Executor’s Account

Here is the basic format.

Deceased Partner’s Executor’s Account	Debit	Credit
To Bank A/c, amount paid	Amount
To Balance c/d, amount still payable	Amount
By Deceased Partner’s Capital A/c		Amount due
By Interest on Executor’s A/c, if payable		Amount

This account is a liability account from the firm’s point of view. So it is credited when the amount becomes payable and debited when payment is made.

If the entire amount is paid immediately, there will be no closing balance.

If only part of the amount is paid, the unpaid balance remains as a liability.

Payment to Executor

If the firm pays the executor immediately, the entry is:

Particulars	Debit	Credit
Deceased Partner’s Executor’s A/c Dr.	Amount paid
To Bank A/c		Amount paid

Suppose Rs. 1,20,000 is due to C’s executor and the firm pays the full amount by bank.

Particulars	Debit	Credit
C’s Executor’s A/c Dr.	Rs. 1,20,000
To Bank A/c		Rs. 1,20,000

After this, the Executor’s Account is closed.

When Only Part Payment Is Made

Sometimes the firm does not pay the full amount immediately. It may pay a portion now and leave the balance payable.

For example, suppose Rs. 1,20,000 is due to C’s executor. The firm pays Rs. 70,000 immediately and keeps the balance unpaid.

The Executor’s Account will look like this:

C’s Executor’s Account	Debit	Credit
To Bank A/c	Rs. 70,000
To Balance c/d	Rs. 50,000
By C’s Capital A/c		Rs. 1,20,000
Total	Rs. 1,20,000	Rs. 1,20,000

The balance of Rs. 50,000 is shown as a liability in the balance sheet.

Interest on Executor’s Account

If the question says that interest is payable on the unpaid amount, interest is credited to the Executor’s Account.

The entry is:

Particulars	Debit	Credit
Interest on Executor’s A/c Dr.	Interest amount
To Deceased Partner’s Executor’s A/c		Interest amount

Then interest is transferred to the Profit and Loss Account:

Particulars	Debit	Credit
Profit and Loss A/c Dr.	Interest amount
To Interest on Executor’s A/c		Interest amount

Why is this interest treated as an expense?

Because once the amount is due to the executor, the firm is holding money payable to someone outside the continuing ownership of the firm. Interest on that unpaid balance is a cost to the firm.

Profit Up to the Date of Death

This is one adjustment that often affects the amount transferred to the executor.

When a partner dies during the accounting year, the final profit for the full year is not yet known. The question may ask you to estimate the deceased partner’s share of profit up to the date of death.

Common bases are:

Basis given in the question	How profit is estimated
Previous year’s profit	Use time proportion up to the date of death
Average profit of past years	Use average profit and time proportion
Sales up to date of death	Calculate profit using the given sales and profit rate

If profit up to the date of death is credited to the deceased partner, the entry is usually:

Particulars	Debit	Credit
Profit and Loss Suspense A/c Dr.	Deceased partner’s share
To Deceased Partner’s Capital A/c		Deceased partner’s share

If it is a loss, the entry is reversed:

Particulars	Debit	Credit
Deceased Partner’s Capital A/c Dr.	Deceased partner’s share of loss
To Profit and Loss Suspense A/c		Deceased partner’s share of loss

The word suspense is used because the final profit for the year has not yet been completely calculated.

Goodwill and the Deceased Partner’s Share

Goodwill is important because the deceased partner had a right to a share in the firm’s reputation built up before death.

If goodwill is adjusted through capital accounts, the deceased partner’s share of goodwill is credited to the deceased partner’s capital account. The gaining partners are usually debited in their gaining ratio.

For example, A, B, and C share profits in the ratio 3:2:1. C dies. The firm’s goodwill is valued at Rs. 90,000.

C’s share of goodwill is:

Particular	Amount
Firm’s goodwill	Rs. 90,000
C’s share	1/6
C’s share of goodwill	Rs. 15,000

If A and B gain in the ratio 3:2, they compensate C as follows:

Partner	Adjustment
A’s Capital A/c debited	Rs. 9,000
B’s Capital A/c debited	Rs. 6,000
C’s Capital A/c credited	Rs. 15,000

This Rs. 15,000 increases the amount that will eventually be transferred to C’s Executor’s Account.

Full Worked Example

Let us solve one compact example from start to finish.

A, B, and C are partners sharing profits and losses in the ratio 3:2:1. C dies on 30 June. The firm’s books show the following:

Particular	Amount
C’s capital balance	Rs. 80,000
General reserve	Rs. 60,000
Revaluation profit	Rs. 30,000
Firm’s goodwill	Rs. 90,000
C’s drawings	Rs. 6,000
Profit for the previous year	Rs. 1,20,000

The firm closes its books on 31 March. Profit up to the date of death is to be estimated on the basis of the previous year’s profit. Rs. 70,000 is paid immediately to C’s executor. The balance remains payable.

Step 1: Calculate C’s Share of Each Adjustment

C’s share in the old ratio is 1/6.

Item	Calculation	C’s share
General reserve	Rs. 60,000 x 1/6	Rs. 10,000
Revaluation profit	Rs. 30,000 x 1/6	Rs. 5,000
Goodwill	Rs. 90,000 x 1/6	Rs. 15,000

Now calculate profit up to the date of death.

From 1 April to 30 June, the period is 3 months.

Particular	Calculation	Amount
Estimated profit for 3 months	Rs. 1,20,000 x 3/12	Rs. 30,000
C’s share	Rs. 30,000 x 1/6	Rs. 5,000

So C’s share of profit till death is Rs. 5,000.

Step 2: Prepare C’s Capital Account

C’s Capital Account	Debit	Credit
To Drawings A/c	Rs. 6,000
To C’s Executor’s A/c	Rs. 1,09,000
By Balance b/d		Rs. 80,000
By General Reserve A/c		Rs. 10,000
By Revaluation A/c		Rs. 5,000
By A’s Capital A/c and B’s Capital A/c, goodwill		Rs. 15,000
By Profit and Loss Suspense A/c		Rs. 5,000
Total	Rs. 1,15,000	Rs. 1,15,000

The amount due to C’s executor is Rs. 1,09,000.

Step 3: Prepare C’s Executor’s Account

C’s Executor’s Account	Debit	Credit
To Bank A/c	Rs. 70,000
To Balance c/d	Rs. 39,000
By C’s Capital A/c		Rs. 1,09,000
Total	Rs. 1,09,000	Rs. 1,09,000

The unpaid balance of Rs. 39,000 will appear as a liability in the balance sheet.

If the Executor Is Paid in Instalments

Some questions say that the executor will be paid in instalments.

For example:

The amount due to C's executor will be paid in two equal annual instalments with interest at 6 percent per annum on the outstanding balance.

In such a question, you should prepare the Executor’s Account carefully year by year.

The usual pattern is:

Step	Treatment
1	Bring down the opening balance payable
2	Add interest on the outstanding balance, if given
3	Record the instalment paid through bank
4	Carry down the remaining balance

Do not calculate interest on the original amount every year unless the question says so. Interest is normally calculated on the outstanding balance for the relevant period.

Common Mistakes to Avoid

Mistake	Why it is wrong
Crediting goodwill directly to Executor’s Account	Goodwill first affects the deceased partner’s capital account
Forgetting profit up to date of death	The deceased partner may be entitled to profit earned before death
Debiting Executor’s Account when amount becomes payable	Executor’s Account should be credited when the firm owes the amount
Treating unpaid balance as closed	Unpaid balance is still a liability
Mixing capital account and Executor’s Account	One calculates the claim, the other settles it
Ignoring interest on unpaid executor balance	Interest must be recorded if the question provides for it

A Quick Memory Map

Use this simple map when revising:

Goodwill, revaluation, reserves, profit till death, drawings
        |
        v
Deceased Partner's Capital Account
        |
        v
Amount due
        |
        v
Deceased Partner's Executor's Account
        |
        v
Bank payment or balance payable

This map is enough to prevent most errors in the topic.

The accounts may look long, but the logic is actually respectful and fair. The firm calculates what belonged to the deceased partner and then settles it with the executor.

That is all Executor’s Account is meant to show.

Frequently Asked Questions

What is Executor’s Account in death of a partner?

Executor’s Account is the account opened to record the amount payable to the deceased partner’s executor or legal representative. It shows the final amount transferred from the deceased partner’s capital account, payments made, interest if any, and the unpaid balance.

Is Executor’s Account a real account or personal account?

Executor’s Account is a personal account because it represents the person or legal representative to whom the firm owes money.

Why is Executor’s Account credited?

It is credited because the firm has a liability towards the executor. When payment is made, the account is debited and bank is credited.

What is the entry for transferring the deceased partner’s balance to Executor’s Account?

The entry is:

Deceased Partner's Capital A/c Dr.
    To Deceased Partner's Executor's A/c

This entry closes the deceased partner’s capital account and creates the payable balance in the Executor’s Account.

Does goodwill go directly to Executor’s Account?

No. Goodwill is first credited to the deceased partner’s capital account. After all adjustments are complete, the final capital balance is transferred to the Executor’s Account.

How is profit till date of death recorded?

If profit is estimated up to the date of death, the deceased partner’s share is credited to the deceased partner’s capital account. The usual entry is:

Profit and Loss Suspense A/c Dr.
    To Deceased Partner's Capital A/c

For a loss, the entry is reversed.

Where is the unpaid executor balance shown?

The unpaid balance in Executor’s Account is shown as a liability in the balance sheet until it is paid.

Is interest allowed on Executor’s Account?

Interest is recorded when the question provides for it or when the settlement terms require it. It is credited to the Executor’s Account and treated as an expense for the firm.