Gce Model Questions Vol1 2024 Financial Accounting Question 25

Practice objective / multiple choice question 25 from the 2024 Gce Model Questions Vol1 Financial Accounting examination.

Gce Model Questions Vol1 2024 Financial Accounting Objective / Multiple Choice Hard Difficulty
Question 25 GCE_MODEL_QUESTIONS_VOL1 • 2024 • FINANCIAL_ACCOUNTING • objective

Three partners A, B and C share profits in the ratio 3:2:1. Their capital balances are A \(£60,000\), B \(£40,000\) and C \(£20,000\). On 1 January 2024, partner C retires and is compensated for his share of goodwill, which is valued at \(£30,000\). The remaining partners agree to continue the business and admit a new partner D, who will contribute \(£50,000\) cash for a 25 % share of future profits. Goodwill is to be shared between the continuing partners (A and B) in their old profit‑sharing ratio. Determine: (a) the amount of goodwill credited to each of the continuing partners; (b) the new profit‑sharing ratio among A, B and D after the admission.

Answer Options

A. Goodwill - A: £20,000; B: £10,000. New profit‑sharing ratio A:B:D = 10:4:6
B. Goodwill - A: £15,000; B: £15,000. New profit‑sharing ratio A:B:D = 8:5:7
Correct Answer C. Goodwill - A: £18,000; B: £12,000. New profit‑sharing ratio A:B:D = 9:6:5
D. Goodwill - A: £12,000; B: £18,000. New profit‑sharing ratio A:B:D = 7:8:5
Correct Answer
C
Correct Option:
Goodwill - A: £18,000; B: £12,000. New profit‑sharing ratio A:B:D = 9:6:5

About This Question

This is Gce Model Questions Vol1 2024 Financial Accounting Question 25. It is one of the objective questions from the 2024 Gce Model Questions Vol1 Financial Accounting examination.

Difficulty level: Hard .

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