Neco 2021 Financial Accounting Question 26

Partners A and B currently share profits in the ratio \(3:2\). Their capital balances are A: \u20A6 120,000 and B: \u20A6 80,000. A new partner C wishes to be admitted with a \( \frac{1}{4} \) share of future profits. The partners agree to revalue a piece of equipment from \u20A6 30,000 to \u20A6 45,000 and to recognise goodwill equal to two years' average profit. The profits for the last three years were \u20A6 50,000, \u20A6 55,000 and \u20A6 60,000. Goodwill and the revaluation surplus are to be shared between A and B in their old profit‑sharing ratio. Determine the amount of cash C must contribute on admission so that his capital represents exactly one‑quarter of the total capital after the adjustments.