What is the journal entry to record the admission of a new partner in a partnership firm?
Practice Questions
1 question
Q1
What is the journal entry to record the admission of a new partner in a partnership firm?
Debit Cash, Credit Capital Account
Debit Capital Account, Credit Cash
Debit Goodwill, Credit Capital Account
Debit Capital Account, Credit Goodwill
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.
Questions & Step-by-step Solutions
1 item
Q
Q: What is the journal entry to record the admission of a new partner in a partnership firm?
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.
Steps: 4
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.
