Neco 2023 Financial Accounting Question 8

Three partners A, B and C share profits in the ratio \(3:2:1\). Their capital balances at year‑end are \( \text{₦}120,000\), \( \text{₦}80,000\) and \( \text{₦}40,000\) respectively. The partnership wishes to admit a new partner D who will receive a \(10\%\) share of future profits. To accommodate D, the partners agree to recognise goodwill of \( \text{₦}60,000\) and a revaluation surplus of \( \text{₦}30,000\). Both goodwill and the revaluation surplus are to be distributed among the existing partners in their profit‑sharing ratio. D will contribute cash equal to his share of goodwill plus his share of the revaluation surplus. Calculate D's cash contribution and the new capital balances of A, B, C and D after admission.