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Anshul and Parul are partners sharing profits in the ratio of 3 : 2. They admit Payal as partner for 1/4th share in profits on 1st April, 2019. Payal brings ₹ 5,00,000 as capital and her share of goodwill by cheque. It was agreed to value goodwill at three years' purchase of average profit of last four years. Profits for the last four years ended 31st March, were ₹ 2015-16 4,00,000 2016-17 5,00,000 2017-18 6,00,000 2018-19 7,00,000 Additional Information:1. Closing Stock for the year ended 31st March, 2018 was overvalued by ₹ 50,000.​2. ₹ 1,00,000 should be charged annually to cover management cost.​Pass necessary Journal entries on Payal's admission.

Answer» Anshul and Parul are partners sharing profits in the ratio of 3 : 2. They admit Payal as partner for 1/4th share in profits on 1st April, 2019. Payal brings ₹ 5,00,000 as capital and her share of goodwill by cheque. It was agreed to value goodwill at three years' purchase of average profit of last four years.























Profits for the last four years ended 31st March, were
2015-16 4,00,000
2016-17 5,00,000
2017-18 6,00,000
2018-19 7,00,000

Additional Information:

1. Closing Stock for the year ended 31st March, 2018 was overvalued by ₹ 50,000.

​2. ₹ 1,00,000 should be charged annually to cover management cost.

​Pass necessary Journal entries on Payal's admission.


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