What accounting steps are taken by a partnership firm when a new partner is unable to bring the business guaranteed by him?
What accounting steps are taken by a partnership firm when a new partner is unable to bring the business guaranteed by him?
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In the given situation following accounting, steps are taken by a partnership firm.
Step 1:
Calculate the expected profit on the business guaranteed by him.
Step 2:
The above profit (Calculated as per step 1) will be charged to the incoming partner’s capital by
New partner’s Capital A/c …Dr.
To Profit & Loss Appropriation A/c
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