Waec Model Questions Vol1 2024 Financial Accounting Question 28

Three partners A, B and C share profit in the ratio 3:2:1. Their capital balances are A ₦120,000, B ₦80,000 and C ₦40,000. The partnership agreement provides interest on capital at 10 % per annum, a salary to A of ₦12,000, and interest on drawings at 6 % on the following drawings: A ₦5,000, B ₦3,000, C ₦2,000. The profit before any adjustments for the year is ₦84,000. Partner C is retiring and wishes to be paid goodwill equal to five times his average profit share over the last three years (the average profit share is the same as his share of the current profit). Determine (i) the amount of goodwill payable to C, and (ii) the final profit amounts that A and B will each receive after all adjustments and after the goodwill has been distributed between them in the profit‑sharing ratio.