2. what Journal entries are passed in the books of the firm at the time of admit partner?80 to100 words
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Answer:
There are two ways for a new partner to join a partnership. In both, a new partnership agreement should be drawn up because the existing partnership will come to an end.
The new partner can invest cash or other assets into an existing partnership while the current partners remain in the partnership.
The new partner can purchase all or part of the interest of a current partner, making payment directly to the partner and not to the partnership. If the new partner buys an existing partner’s entire interest, the existing partner leaves the partnership.
The new partner’s investment, share of ownership capital, and share of the net income or loss are all negotiated in the process of developing the new partnership agreement. Based on how a partner is admitted, oftentimes the admission can create a situation to be illustrated called a bonus to those in the partnership. A bonus is the difference between the value of a partner’s capital account and the cash payment made at the time of that partner’s or another partner’s withdrawal.
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