Neco Model Questions Vol1 2025 Financial Accounting Question 7

Practice objective / multiple choice question 7 from the 2025 Neco Model Questions Vol1 Financial Accounting examination.

Neco Model Questions Vol1 2025 Financial Accounting Objective / Multiple Choice Hard Difficulty
Question 7 NECO_MODEL_QUESTIONS_VOL1 • 2025 • FINANCIAL_ACCOUNTING • objective

Three partners A, B and C share profits in the ratio 3:2:1. Their capital balances are A = \(\text{₦}120,000\), B = \(\text{₦}80,000\), C = \(\text{₦}50,000\). The partnership's goodwill is valued at \(\text{₦}90,000\). A new partner D is admitted, bringing in cash of \(\text{₦}45,000\) for a 20 % share. Goodwill is to be shared among the existing partners in their profit‑sharing ratio. After admission the profit‑sharing ratio becomes A : B : C : D = 2.5 : 1.5 : 1 : 1.\n\n(a) How much goodwill credit is allocated to each existing partner?\n(b) What are the revised capital balances of A, B, C and D immediately after D's admission?

Answer Options

A. Goodwill - A: ₦45,000; B: ₦25,000; C: ₦20,000. Revised capitals - A: ₦149,000; B: ₦95,000; C: ₦64,666.67; D: ₦77,000
Correct Answer B. Goodwill - A: ₦45,000; B: ₦30,000; C: ₦15,000. Revised capitals - A: ₦149,000; B: ₦99,333.33; C: ₦59,666.67; D: ₦77,000
C. Goodwill - A: ₦50,000; B: ₦30,000; C: ₦10,000. Revised capitals - A: ₦154,000; B: ₦99,333.33; C: ₦55,666.67; D: ₦77,000
D. Goodwill - A: ₦40,000; B: ₦30,000; C: ₦20,000. Revised capitals - A: ₦144,000; B: ₦99,333.33; C: ₦64,666.67; D: ₦77,000
Correct Answer
B
Correct Option:
Goodwill - A: ₦45,000; B: ₦30,000; C: ₦15,000. Revised capitals - A: ₦149,000; B: ₦99,333.33; C: ₦59,666.67; D: ₦77,000

About This Question

This is Neco Model Questions Vol1 2025 Financial Accounting Question 7. It is one of the objective questions from the 2025 Neco Model Questions Vol1 Financial Accounting examination.

Difficulty level: Hard .

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