Gce Model Questions Vol1 2017 Financial Accounting Question 33

A & B run a partnership with a profit‑sharing ratio of 3:2. Their capital balances on 1 Jan 2017 are A £45,000 and B £30,000. On that date they admit C as a new partner. C will receive a 25 % share of future profits. Goodwill of the partnership is agreed to be £30,000 and will be shared between A and B in their old profit‑sharing ratio. The partnership also re‑values a piece of equipment, increasing its value by £5,000, which is to be shared between A and B in the same old ratio. C contributes £20,000 cash and also takes a loan of £10,000 from the partnership (the loan is recorded as a liability). Determine: (a) the amount of goodwill credited to A and to B; (b) the new capital balances of A, B and C after admission, assuming the goodwill and the re‑valuation surplus are transferred to the existing partners' capital accounts.