JAMB Accounting 2007 Objective — Question 17

Question 17 of 46 from the Joint Admissions and Matriculation Board (JAMB) Accounting 2007 Objective paper, with the correct answer and a full explanation.

Osei and Yabo were in a partnership sharing profits and losses in the ratio of 3:2. On admitting Takwa, the profit and loss sharing ratio was changed to 1:1:1. Suppose Takwa paid 30,000 for goodwill, this amount would be

A. credited to Takwa's current account
B. debited to goodwill account
C. shared to all the partners capital account
D. credited to the old partners' capital accountCorrect

Explanation

Goodwill paid in by a new partner is credited to the old partners' capital accounts in their old profit-sharing ratio, since they are giving up part of their future profit share.

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