Gce Model Questions Vol1 2023 Financial Accounting Question 27

Three partners - A, B and C - share profits in the ratio 3:2:1. Their opening capital balances are \(\pounds30,000\), \(\pounds20,000\) and \(\pounds10,000\) respectively. During the year the partnership earned a net profit of \(\pounds12,000\) and a building was re‑valued upwards by \(\pounds6,000\). The re‑valuation surplus is allocated in the profit‑sharing ratio. After these adjustments, a new partner D is admitted with a 1/5 share in future profits. D pays cash equal to one‑year's share of the re‑valuated profit and also receives a goodwill bonus of \(\pounds4,000\) taken equally from A and B (C does not contribute to the bonus).\n\nCalculate (i) the cash amount D must pay on admission, and (ii) the revised capital balances of A, B, C and D immediately after D's admission.