Day: July 3, 2023

X and Y are in partnership, sharing profits equally.

They agree to admit Z as an equal partner.

Z is to introduce capital into of the partnership worth £100,000.

The partnership goodwill is £60,000 and all adjustments are to be made in the capital accounts.

Which shows the correct situation after the admission of Z to the three partners’ capital accounts?

Select ONE answer:

1. X a credit of £10k and Y a credit of £10k and Z a credit of £80k
2. X a credit of £10k and Y a credit of £10k and Z a debit of £20k
3. X a credit of £30k and Y a credit of £30k and Z a debit of £60k
4. X a debit of £30k and Y a debit of £30k and Z a credit of £160k

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – Step 1 – Dr Goodwill £60k Cr X Capital Account £30k and Y Capital Account £30k. Step 2 – Dr Cash £100k Cr Z Capital Account £100k. Step 3 (Goodwill w/o) Dr X Capital Account £20k Dr Y Capital Account £20k Dr Z Capital Account Cr Goodwill £60k
2. Not correct
3. Not correct
4. Not correct

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