Recording of Capital of a New Partner :
It is not compulsory that the new partner bring capital at the time of admission. He may be admitted in view of his talent, skill and
reputation. However, in many cases, the incoming partner brings capital into the firm. With the consent of all the old partners, he may bring capital in cash or in kind or both.
The accounting treatment is
Cash A/c Dr …..
Stock A/c Dr …..
Furniture A/c Dr …..
To New partners Capital A/c …..
Illustration :
Anandan and Balaraman are partners in a firm with capitals of Rs.70,000 and Rs.50,000 respectively. They decided to admit Chandran
into the firm with a capital of Rs.40,000. Give journal entry for Capital brought in by Chandran.
Solution:
Journal Entry
Date | Particulars | L.F | Debit
Rs. |
Credit Rs |
Cash A/c Dr | 40,000 | |||
To Chandran’s Capital A/c | 40,000 | |||
(Cash brought in by Chandran as |