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 RS.5,00,000 as capital and her share of goodwill by cheque. It was agreed to value goodwill at three year's purchase of average profit of last four years:
`{:("Profit for the last years ended 31st March were:","RS."),("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 RS.50,000.
2. RS.1,00,000 should be charged annually to cover management cost.
Pass necessary Journal entries on Payal's admission.