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Admission of Partner

The document discusses journal entries for admitting a new partner to a partnership. It covers entries for goodwill paid in cash or not paid in cash, revaluation of assets and liabilities, adjusting partner capital accounts, and preparation of new balance sheets and partner capital accounts when admitting a new partner.

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Lakshay Saini
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2K views3 pages

Admission of Partner

The document discusses journal entries for admitting a new partner to a partnership. It covers entries for goodwill paid in cash or not paid in cash, revaluation of assets and liabilities, adjusting partner capital accounts, and preparation of new balance sheets and partner capital accounts when admitting a new partner.

Uploaded by

Lakshay Saini
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as RTF, PDF, TXT or read online on Scribd
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ADMISSION OF A PARTNER

Journal Entries:1.

Capital and Goodwill is brought by new partner :Cash A/c


To New partner's capital A/C
To Goodwill(Premium)

Dr.

2. General Reserve ,P/L(profit) and other accumulated


profits distributed in old partner.
General Reserve/P\L(profit) A/C
To old partner's capital A/C

Dr.

3. P/L loss and charged from old partner .


Old Partner's capital A/C
To P/L loss \Goodwill

Dr.

4. Dr. items of revaluation A/C.


Revaluation A/C
To Stock/ prov. etc.

Dr.

5. Cr. items of revaluation A/C.


Stock/ Debtors rtc. A/C
To Revaluation A/C

Dr.

6. Revaluation profit transferred partner's (old) partner's

capital A/C.
Revaluation A/C
To partner's capital A/C

Dr.

7. Revaluation (loss) transferred to partner's capital A/C.


Old Partner's capital A/C

Dr.

To Revaluation A/C

Treatment of Goodwill:8. Goodwill is brought in cash and paid to old partner

privately:- no entry
9. Goodwill (old) is written of
Old Partner's capital A/C
To Goodwill

Dr. (O.R.)

10. Goodwll is brought in cash by new partner and retained

in business
1. When cash is brought for Goodwill and Capital
Cash A/C
Dr.
To New partner's capital
To Premium(goodwill)
2. Being distribution of goodwill in S.R.
Goodwill A/C
Dr.
Gaining partner's capital
Dr.
To sacrifcing partner capital
3. If goodwill is withdrawn by old partners (option)
old partner's capital A/C
Dr.
To Cash/Bank A/C

11. New partner is not able to bring Goodwill in cash


New partner's capital A/C
To Sacrificing partner's capital A/C

Dr.

Note:- If there is adjustment of capital in question then, goodwill


is not charged from capital A/C but charged from his current A/C
New Partner's capital A/C
To old partner's capital A/C(S.R.)

Dr.

12. Some part is brought in cash and for some part is not

able to bring in cash .


Note:- 1. For which part is brought in cash rulr(C) is applied .
2. For which part is not brought in cash rule(D) is applied .

Note:- 1. only New Goodwill(share of new partner) is


adjusted in sacrificing ratio, old goodwill is distributed in O.R.
2. only share of new partner in goodwill is treated , not total
goodwill is treated .
3. When an old partner has sacrifice and other old partner
has gain then, total goodwill with new partner is adjusted in
gaining to sacrifice
Gaining partner's capital A/C

Dr.

To sacrificing partner's capital

Preparation of accounts at the time of


admission:1. Revaluation A/C 2. Partner's capital A/C 3. Cash
A/C 4. Balance Sheet (new)

Adjustment of CAPITAL :

Adjustment of capital is made in partner's capital A/C after


all adjustments

13. On the basis of new partner's bringing capital :14. According to new partner's bringing capital calculate

the total capital of firm (bring capital multiply by


reciprocal of his profit share)
15. total capital is adjusted in new ratio and that will be

closing balance of partner's capital


16. Diference of individual is covered up by bringing or

withdrawing by old partner which is shown in their


capital A/Cs as "To cash" or "By cash".
17. gh

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