Question

In a partnership, a partner can contribute an initial investment, have a drawing account, and have loans to the partnership. Describe the accounting and reporting implications of each of these partner transactions on the formation and reporting of the partnership. Is providing a loan to a partnership on the same level as the initial investment and ongoing profits and losses by a partner? Why or why not?

Answer 1

Answer:-

• In the event that an accomplice puts resources into the gets capital or possession in the association and if organization firm get sold at that point accomplice arrive individual offer proprietorship.
• An accomplice can put resources into money and advantages for achieve possession. Firm records it as pursues :-

Particulars	Debit ($)	Credit ($)
Cash	xxxxxx
Partner's capital		xxxxxx
Cash	xxxxx
Machinery	xxxxx
Partner's capital		xxxxxx

• Accomplice can remove cash from the business at whatever point they need.
• Accomplice are normally not thought about workers of the organization and may not get paychecks.
• At the point when the accomplice remove cash from the business , it is recorded in the withdrawals or drawing account .
• This is an agreement value account since the proprietors are diminishing the estimation of their possession by removing cash from the organization .

Particulars	Debit ($)	Credit ($)
Partner's capital	xxxxxx
Cash		xxxxxxx
( To record Cash withdrawn )

• An advance isn't a piece of the accomplice's capital , and the advance is dealt with is indistinguishable route from a credit from an outsider.
• The risk of the association will be recorded by the formation of an obligation , bringing about a credit balance for the measure of the advance .
• The obligation passage will rely upon how the advance was made. On the off chance that the accomplice stored trade out the financial balance , the charge section will be in the ledger.
• On the off chance that the credit was made by changing over an extent of the accomplice's capital into an advance , the charge passage will be in the capital record .
• The enthusiasm on the credit will be an operational expense and ought to along these lines be charged to the wage articulation.