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What is the journal entry to record the admission of a new partner in a partners

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Question: What is the journal entry to record the admission of a new partner in a partnership firm?

Options:

  1. Debit Cash, Credit Capital Account
  2. Debit Capital Account, Credit Cash
  3. Debit Goodwill, Credit Capital Account
  4. Debit Capital Account, Credit Goodwill

Correct Answer: Debit Cash, Credit Capital Account

Solution: 

When a new partner is admitted, the firm usually receives cash, which is debited to Cash, and the corresponding credit is made to the Capital Account of the new partner.

What is the journal entry to record the admission of a new partner in a partners

Practice Questions

Q1
What is the journal entry to record the admission of a new partner in a partnership firm?
  1. Debit Cash, Credit Capital Account
  2. Debit Capital Account, Credit Cash
  3. Debit Goodwill, Credit Capital Account
  4. Debit Capital Account, Credit Goodwill

Questions & Step-by-Step Solutions

What is the journal entry to record the admission of a new partner in a partnership firm?
  • Step 1: Identify the amount of cash the new partner is contributing to the partnership.
  • Step 2: Create a journal entry to record the cash received. Debit the Cash account for the amount contributed.
  • Step 3: Credit the Capital Account of the new partner for the same amount to reflect their investment in the partnership.
  • Step 4: Ensure that the total debits equal the total credits in the journal entry.
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