journal entres of admission of partners
Answers
Investment at book value journal entry
The journal entry to reflect the admission of a new partner is as follows. Cash increases by 16,250 as the new partner invests in the partnership. Since the investment was made at book value the capital account of the new partner is also credited with the amount
Admission of a New Partner – Investment at Book Value
Providing the amount invested by the new partner is equal to the book value of the percentage of the partnership purchased, the new partners capital account is simply credited with the amount invested.
Suppose for example a partnership has two existing partners A and B with total combined capital of 65,000. The admission of a new partner C is agreed on the basis that C provides additional capital in return for a 20% share.