A and are equal partners. Their balance sheet at 30 June 1983 is They agree to

A and Β are equal partners. Their balance sheet at 30 June 1983 is

They agree to admit C as a new partner with effect from 1 July 1983, sharing profits A:B:C,3:3:2 . Goodwill is valued at £16,000, and A and Β are considering which method of admission would be most appropriate.
(i) C will introduce £10,000 as capital, but is unable to pay for his share of the goodwill. A goodwill account would, therefore, be created.
(ii) C pays for his share of the goodwill, the balance of his £10,000 being treated as a capital contribution. No account would be raised for goodwill, and the monies would remain within the business.
(iii) The arrangements would be as for (ii) but the payment for goodwill would be withdrawn by the partners.
Required:
Draw up three balance sheets showing the effect of the alternative methods of admission.

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Capital A B Premises 24,000 20,000 Equipment 8,000 20,000 Stock 6,500 Current A/cs Debtors 3,000 A 1,500 Cash 3,000 B 1,000 Creditors 2,000 44,500 44,500