Accounting Treatment

(a) If at the time of admission of the new partner any Accumulated Profits/Reserves appear in the Balance Sheet, these will be distributed among the old partners in the old ratio by passing the following journal entry:

General reserve                                 Dr.

Reserve Fund                                    Dr.

Profit & Loss A/c                              Dr.

Workman’s Compensation Reserve A/c            Dr.

Investment Fluctuation Fund A/c               Dr.

Contingency Reserve A/c                       Dr.

To Old Partner’s Capital A/c (in old ratio)

(b)For distribution of accumulated losses:

Old Partner’s Capital A/c                       Dr.

To Profit & Loss A/c

Capital Accounts of the partners on admission of partner

Check for More Posts in This Category