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 5,00,000 as capital and her share of goodwill by cheque. It was agreed to value goodwill at three years' purchase of average profit of last four years.

Profits for the last four

years ended 31st March, were

1. Closing Stock for the year ended 31st March, 2018 was overvalued by 50,000.
2. 1,00,000 should be charged annually to cover management cost. Pass necessary Journal entries on Payal's admission.