Neco Model Questions Vol1 2017 Financial Accounting Question 21

Existing partners A, B and C share profits in the ratio 3:2:1 and have capital balances of \(\text{₦}120,000\), \(\text{₦}80,000\) and \(\text{₦}40,000\) respectively. A new partner D is admitted for a \(\frac{1}{5}\) share of profits, contributing \(\text{₦}50,000\) in cash. At the same time the partnership re‑values a building (carrying amount \(\text{₦}180,000\), market value \(\text{₦}250,000\)) and a bank loan (carrying amount \(\text{₦}30,000\), market value \(\text{₦}25,000\)). Goodwill is valued at two years' average profit of the last three years, where the profits were \(\text{₦}60,000\), \(\text{₦}70,000\) and \(\text{₦}80,000\). Goodwill and the net re‑valuation surplus are to be shared among the existing partners in their original profit‑sharing ratio, and the goodwill is treated as a bonus to them (D does not pay for goodwill). Determine the new capital balances of A, B, C and D after D's admission.