Neco 2022 Financial Accounting Question 48

In a partnership, A and B share profits in the ratio \(3:2\). Their capital balances are A \(\text{₦}500,000\) and B \(\text{₦}300,000\). The partnership revalues a building from its book value \(\text{₦}400,000\) to \(\text{₦}600,000\), creating a revaluation surplus. A new partner C is admitted, taking a one‑quarter (\(\frac{1}{4}\)) share of future profits. Goodwill of the firm is valued at \(\text{₦}200,000\) and will be shared between the existing partners in their old profit‑sharing ratio. C also pays for his share of the revaluation surplus proportionally to his profit share. Calculate:\n\na) The amount of goodwill credited to A and to B.\nb) The cash contributed by C.\nc) The new capital balances of A, B and C after admission.