Question

Ramos and Bailey have a frozen yogurt shop in Victoria, BC. They are equal partners, with $30,000 in each of their partnership capital accounts. Bailey’s sister Kate is admitted to the partnership on October 1, 2020, after paying $30,000 to the partnership for a one-third interest. Prepare the entry to show Kate’s admission to the partnership.

Answer 1

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Answer

Please the new partner is admitted , he/she brings cash into the firm .Therefore cash account of the firm will be debited . A new capital accounting the name of the new partner will be opened and credited. Therefore the journal entry will be:
Cash account will be debited by 30,000 $ and capital account of Kate is credited by the same amount

Cash Dr.	30,000
Capital -Partner Kate		30,000
( For the new partner admitted )