0Admission of a Partner is a critical chapter of your syllabus. It involves appling few of the prominent concepts of Partnership Accounts and present the New Balance sheet of the Firm afer a New partner is incorporated in the Business.
Please remember the following accounts have to be prepared for a 14 Marks sum on Admission of a Partner:
1. Revaluation Account: Records the changes in the value of Assets and Liabilities in the process. Also records unrecorded expenses and Liabilities. The balance in the revaluation A/c is transferred to Partner's capital A/c.
2. Partner's Capital Accounts: This Account notes the change in the Capital balances of the Partners of the firm. The new partner bringing capital in to business, his share of Goodwill in the business, distribution of exsisting Goodwill, writting off of Reserves, P&L balances etc. is recorded in this account. All other apprpriation items like interest on capital, interest on drawings, etc are also recorded.
3. Cash A/s: It is beter to maintanin either Cash or Bank A/c as lot of changes are made in the Cash/Bank balances during the admission process. the capital newly brought in, goodwill brought in by new partner, withdrawal of Goodwill by incoming partners, etc. are recorded in this account.
4. Balance Sheet of the New Firm: This is the most important statement and is prepared after considering all the changes in the process of the Admission.
Check: Partner's capital: Closing balnce of the Capital A/c.
Reserves and Accumulated Profits, Exsisting Goodwill: Will not appear in the New Balance sheet.
Cash & Bank: New Balance of the Cash/Bank A/c will appear.
All Assets and Liabilities: New Values after considering the Revaluation changes will appear.
