Gce Model Questions Vol1 2018 Financial Accounting Question 26

Two existing partners, A and B, have capital balances of £30,000 and £20,000 respectively and share profits in the ratio \(3:2\). Goodwill of the firm is valued at £12,000 and is to be shared between A and B in their old profit‑sharing ratio. A new partner C is admitted. The agreement states that C will acquire one‑third of A's capital and one‑third of B's capital, and that C will take a \(25\%\) share of the future profits. C pays £8,000 cash and also pays his share of goodwill. After admission the profit‑sharing ratios become C : A : B = \(25\%\) : \(45\%\) : \(30\%\). Determine the amount that must be transferred from A's capital to B's capital so that the partners' capital balances are in the same proportion as the new profit‑sharing ratios.