Neco 2019 Financial Accounting Question 28

Three partners A, B and C share profits in the ratio 3:2:1. Their opening capital balances are A = 300,000, B = 200,000 and C = 100,000. During the year the partnership earned a net profit of 180,000 which was shared according to the profit‑sharing ratio. Before admitting a new partner D, the partners revalued a building from a carrying amount of 350,000 to a market value of 420,000; the surplus is shared in the old profit‑sharing ratio. Goodwill is to be recognised at 1.5 times the average of the partners' capital after profit allocation and revaluation (but before goodwill). D will be admitted with a 1/5 share in profits and will contribute cash equal to his share of goodwill plus a premium of 20,000. Compute:\n(a) the amount of goodwill to be recognised;\n(b) the cash contribution required from D;\n(c) the new capital balances of A, B, C and D after admission.