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Question: In 1955, A set up in business as a sole trader. On 1st January, 1956, B. joined him as a partner taking one-third of the profits and paying £1,200 as a premium for Goodwill. On 1st January, 1958, C was admitted as a new partner. It was decided to raise a Goodwill Account in the books of the firm and the value placed upon this asset was £6,000. The profit sharing ratio of the new firm was A: one-half, B: one-third and C: one-sixth. From 1958 to 1961, the Goodwill balance was written down in the books of the firm and on 31st December 1961, it stood at £3,000. The business was then sold and the amount received for Goodwill was £3,600. Prepare a statement showing the net amount gained or lost by each of the partners on account of Goodwill from the commencement of the business to the final date of sale.
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