Neco 2019 Financial Accounting Question 42

Partners A, B and C share profit in the ratio 3:2:1. Their opening capital balances are A \(\text{₦}120,000\), B \(\text{₦}80,000\) and C \(\text{₦}40,000\). During the year profit before interest is \(\text{₦}96,000\) and interest on capital is charged at \(5\%\) per annum. At the end of the year a new partner D is admitted. Goodwill is valued at \(\text{₦}30,000\) and is shared among the existing partners in their old profit‑sharing ratio. D is to acquire a 20\% share of the partnership. After admission the profit‑sharing ratios become A 2.5, B 1.5, C 1, D 1 (total 6). Determine (i) the amount of goodwill credited to each existing partner, and (ii) the cash that D must actually pay to obtain his 20\% share after the goodwill allocation.