Neco Model Questions Vol1 2023 Financial Accounting Question 26

A partnership of A and B shares profit in the ratio 3:2. The partnership's net assets at book value are Cash \(\text{₦}50,000\) and Equipment \(\text{₦}120,000\) (depreciated to \(\text{₦}80,000\)). A revaluation shows the equipment's fair value is \(\text{₦}100,000\), creating a revaluation surplus of \(\text{₦}20,000\). The average profit for the last three years is \(\text{₦}120,000\) and goodwill is valued at 30 % of this average. A new partner C is admitted. C agrees to pay 60 % of goodwill in cash and to take a one‑fifth share of the revaluation surplus. After admission the profit‑sharing ratio becomes A : B : C = 2 : 1 : 2. Determine the cash amount paid by C and the amounts to be credited to A and B in their capital accounts.