Chapter 12, Problem S12.6SE

To determine

Concept Introduction:

Partnership: Partnership is one of the types of business origination. Under the partnership, two or more individuals agree to form a business together and share losses and profits in the predetermined ratio. A partnership may be a general partnership or a limited partnership.

Admission of a partner: An existing partnership may admit a new partner and a new partnership is formed. The accounting of admission of new partner depends upon the way of admission of the partner. A new partner may admit in an existing firm in following ways:

1. By bringing a new asset or cash
2. By purchasing the interest in partnership from existing partners of the firm
3. By paying the bonus for the goodwill of the firm
4. By receiving the bonus for goodwill

Requirement-1:

To prepare: The journal entry to record admission of new partner

To determine

Requirement-2:

To state: The Rights of a full partner