While doing adjustment of partners capital, for the amount of capital to be brought in by the partner, the following entry will be passed:
Answer & explanation
Correct answer: option 4
The correct answer is option 4-
Cash/ Bank A/c Dr.
To Partners' Capital A/c.
When partners are required to bring in additional capital (e.g., to adjust capital accounts in a new profit-sharing ratio or after revaluation), they bring cash into the firm. For that the journal Entry is as follows-
Cash / Bank A/c Dr.
To Partners' Capital A/c
Cash/Bank A/c is debited because money is coming into the business. Partners' Capital A/c is credited because the partner’s capital is increasing.