Please Help: Accounting Treatment
Posted Date : 18-Apr-2013 , 10:04:54 am | Posted By sandeep Kaushik
Hello Everyone,
I have run a propriter business from last 3 years & capital bal on 31.03.2010 is Rs. 200000 and during the period 10-11 i had suffred business loss of 500000 due to which reason my capital bal. gone negative and i had take unsecured loan for running the business so, my capital bal. on 31.03.2011 is Rs. -300000. and after that i unable to run business in sole proprietorship hence, i decide to merge with a partnership business, all assets and liabilities are takeover by partnership firm on 01.04.2011 and i had also partners in new firm, then what will be accounting treatment of my negative capital bal. in the books of firm as well as in books of propriter , while capital introduced by me in partnership firm is rs. 40000.
Plz explin me accounting treatment of above adjustment by Journal Entry.
I have run a propriter business from last 3 years & capital bal on 31.03.2010 is Rs. 200000 and during the period 10-11 i had suffred business loss of 500000 due to which reason my capital bal. gone negative and i had take unsecured loan for running the business so, my capital bal. on 31.03.2011 is Rs. -300000. and after that i unable to run business in sole proprietorship hence, i decide to merge with a partnership business, all assets and liabilities are takeover by partnership firm on 01.04.2011 and i had also partners in new firm, then what will be accounting treatment of my negative capital bal. in the books of firm as well as in books of propriter , while capital introduced by me in partnership firm is rs. 40000.
Plz explin me accounting treatment of above adjustment by Journal Entry.
Category : Accounts | Answers : 1 | Comments : 0 | Hits : 190
Answers
Answer By: Rishabh Upadhyay
Since the proprietorship business is taken over by the partnership firm, so the firm will acquire all the assets and liabilities of the firm including the money you owe to the proprietorship firm in the form of overdrawn capital.
Ner profit sharing ratio in the firm may be on the basis of capital contribution or as the partners may decide. On the other hand the asset side of new firm will have you as a debtor under the group "Loans and advances"
Ner profit sharing ratio in the firm may be on the basis of capital contribution or as the partners may decide. On the other hand the asset side of new firm will have you as a debtor under the group "Loans and advances"
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