Neco 2019 Financial Accounting Question 25

Partners A and B run a business with a profit‑sharing ratio of 3:2. Their original capital balances are A: \(\text{₦}150,000\) and B: \(\text{₦}100,000\). The partnership revalues its building upward by \(\text{₦}50,000\), which is credited to a revaluation reserve. Goodwill is valued at \(\text{₦}120,000\) and is to be shared between the existing partners in their profit‑sharing ratio. A new partner C is admitted, contributing \(\text{₦}80,000\) in cash for a 25 % share of the profits. After admission, the profit‑sharing arrangement becomes A:B:C = 45 % : 30 % : 25 %. During the year, the partnership earns a net profit of \(\text{₦}90,000\).\n\nCalculate the capital balances of A, B and C at the end of the year, after allocating goodwill, admitting C, and distributing the year's profit according to the new sharing ratios.