Account's project
Storyboard Text
- Me and Andrew have PSR of 1:2, and your share will be 2/5.
- Hey Sasha, welcome to the firm. For you to enjoy rights of share in profit and assests of firm, you must contribute to goodwill and capital of the firm.
- I will bring 2,00,00 as capital but won't be able to bring premium of goodwill for now
- Okay
- Okay sir
- Accountant Office
- Hey Peter, as you know, Sasha has joined our firm for 2/5th profits. She has brought 2 lakhs as capital but didn't bring goodwill yet. Please update the books for the same.
- Also, me and George will withdraw half of our premium of goodwill
- Bank a/c dr 20,00,000To Sasha's capital a/c 20,00,000(Being capital brought in cash)
- I have passed the entry for the capital brought by sasha
- Previous years' profits - 50,00075,0001,00,000
- Total - 2,25,000
- Sasha's premium for goodwill = 1,50,,000 x 2/5 = 60,000
- Now, goodwill will be 75,000 x 2 = 1,50,000.
- Avg Profit - 2,25,000 / 3 = 75,000
- The goodwill is valued at twice the average profit of past 3 years. Now lets calculate goodwill
- Sasha's share of goodwill which is 60,000 will be distributed in gaining ratio 1:2. Since sasha did not bring goodwill, it will be routed through her current account
- Sasha's current a/c Dr 60,000 To Andrew's capital a/c 40,000 To George's capital a/c 20,000(Being premium for goodwil paid to sacrificing partners)
- Now this last entry is about partners withdrawing half of their share gained.
- George's capital a/c Dr 10,000Andrew's capital a/c Dr 20,000To Bank a/c 30,000
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