Gupta, Richards and Jones are in partnership sharing profits and losses in the ratio 5 : 4 : 3. On 1 January 20X3 Richards retired from the partnership and it was agreed that Singh should join the partnership, paying a sum of £30,000. From this date, profits are to be shared equally between the three partners and, in view of this, Jones agrees to pay a further £10,000 into the partnership as capital. The statement of financial position at 31 December 20X2 showed:

It was agreed that in preparing a revised opening statement of financial position of the partnership on 1 January 20X3, the following adjustments should be made:
1. Property is to be revalued at £70,000 and fixtures are to be revalued at £32,000.
2. Inventory is considered to be shown at a fair value in the financial statements. A provision for doubtful debts of £1,200 is required.
3. Professional fees of £600 relating to the change in partnership structure are to be regarded as an expense of the year to 31 December 20X2, but were not included in the statement of profit and loss of that year. They are expected to be paid in March 20X3.
4. Goodwill of the partnership as at 31 December 20X2 is estimated at £30,000. No account for goodwill is to be entered in the books, but appropriate adjustments are to be made in the partners' capital accounts.
5. On retirement, Richards is to be paid a sum of £40,000. The balance owing to her will be recorded in a loan account carrying interest of 12 per cent, to be repaid in full after two years.
6. All balances on current accounts are to be transferred to capital accounts. All balances on capital accounts in excess of £20,000 after this transfer are to be transferred to loan accounts carrying interest at 12 per cent.
Required
a. Compute the balances on the loan accounts of Richards and the new partners on 1 January 20X3, following completion of these arrangements.
b. Prepare an opening statement of financial position for the partnership on 1 January 20X3, following completion of these arrangements.
c. Explain briefly three factors to be taken into account when establishing profit-sharing arrangements between partners.

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ASSETS Non-current assets Property Fixtures 60,000 30,000 90,000 Current assets Inventories Trade receivables Bank 30,000 15,000 5,000 50,000 140,000 Total assets EQUITY AND LIABILITIES Owners' equity Capital accounts -Gupta - Richards 60,000 40,000 25,000 125,000 - Jones Current accounls Gupta - Richards 1,000 2,500 - Jones Total equity Current liabilities 1,5005,000 130,000 Trade payables 10,000 10,000 140,000 Total current liabilities Total equity and liobilities