Kemi and Chidi are partners in a accounting firm sharing profits and losses in the ratio of . They admit Ngozi into the partnership with a share in future profits. Ngozi pays as premium for goodwill, which is credited to the existing partners' capital accounts in their profit-sharing ratio. What is the amount of goodwill premium credited to Kemi's capital account (in )?
Answer: 12000 ₦
Answer
The amount credited to Kemi's capital account for goodwill premium is ₦12,000.
Kemi's share of the goodwill premium is calculated by taking her 3/5 profit share of the total ₦20,000 premium brought in by the incoming partner, which equals ₦12,000.
Step-by-Step Solution
Key Concept
Allocation of Goodwill Premium on Admission of a New Partner