A new partner brings Rs. 80,000 in cash as capital on admission. Which journal entry records this contribution?
Correct answer: B. Cash Account Dr, New Partner’s Capital Account Cr
- A. New Partner’s Capital Account Dr, Cash Account Cr
- B. Cash Account Dr, New Partner’s Capital Account Cr
- C. Revaluation Account Dr, Cash Account Cr
- D. Cash Account Dr, Revaluation Account Cr
Explanation
The firm receives cash, so the Cash Account is debited. The partner’s capital increases by the same amount, so the New Partner’s Capital Account is credited.
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About Partnership Accounts
Partnership accounts cover the partnership agreement, capital and current accounts, profit and loss appropriation, salaries, interest on capital, interest on drawings and profit-sharing ratios. They also address changes in partnership, including admission, retirement, goodwill, revaluation, dissolution and the settlement of partners’ balances.
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