hi,
A proprietor is doing business by taking amount from other person and both will enter into partnership later on. so how the amount received from other person is accounted for before and after entering partnership.
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Accounting query?
Replies (6)
Quick Summary
I think it should be treated as loan before or the partner paid the amount should be treated as introduce of capital
Treated same as you said
You need to first settle the amounts between both before entering into partnership as the amounts taken from other person has no relation with the partnership business.
How about the payment to vendors directly made by other person from his bank account before entering into partnership. What if it is shown as loan before and shown as capital on entering into partnership
If the vendor's continue to be the vendor's of the new partnership firm then whatever is paid by the the other person upto formation of the partnership firm can be treated as loan to firm and after that vendor can be paid from business account of firm
if vendor would not be of the newly constituted firm then it needs to be settled before entering the partnership.
if vendor would not be of the newly constituted firm then it needs to be settled before entering the partnership.
Agree with above comment
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