Gce Model Questions Vol1 2025 Financial Accounting Question 8

Practice objective / multiple choice question 8 from the 2025 Gce Model Questions Vol1 Financial Accounting examination.

Gce Model Questions Vol1 2025 Financial Accounting Objective / Multiple Choice Hard Difficulty
Question 8 GCE_MODEL_QUESTIONS_VOL1 • 2025 • FINANCIAL_ACCOUNTING • objective

Three partners A, B and C share profits in the ratio 3:2:1. Their year‑end capital balances are A \(\text{₦}120,000\), B \(\text{₦}80,000\) and C \(\text{₦}40,000\). Goodwill of the partnership is valued at \(\text{₦}30,000\). A new partner D is admitted, paying cash of \(\text{₦}50,000\) for a 20 % share of future profits. The partners agree that goodwill will be shared in the new profit‑sharing ratio, i.e. A:B:C:D = 25 % : 15 % : 5 % : 20 %. Determine (a) the amount of goodwill each partner receives (or pays) and (b) the adjusted capital balances of A, B, C and D immediately after D's admission.

Answer Options

A. Goodwill allocation - A:12000, B:8000, C:4000, D:6000; Adjusted capitals - A:131000, B:88000, C:44000, D:50000
B. Goodwill allocation - A:15000, B:10000, C:5000, D:0; Adjusted capitals - A:150000, B:100000, C:50000, D:50000
Correct Answer C. Goodwill allocation - A:12000, B:8000, C:4000, D:6000; Adjusted capitals - A:132000, B:88000, C:44000, D:50000
D. Goodwill allocation - A:12000, B:8000, C:4000, D:5000; Adjusted capitals - A:132000, B:88000, C:44000, D:45000
Correct Answer
C
Correct Option:
Goodwill allocation - A:12000, B:8000, C:4000, D:6000; Adjusted capitals - A:132000, B:88000, C:44000, D:50000

About This Question

This is Gce Model Questions Vol1 2025 Financial Accounting Question 8. It is one of the objective questions from the 2025 Gce Model Questions Vol1 Financial Accounting examination.

Difficulty level: Hard .

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