X and Y were partners, dividing profits and losses in the ratio 1 : 2 respectively. Z was then admitted into the partnership. The goodwill was agreed to be valued at $120\,000. No goodwill account was to remain in the books of account. Profits and losses were to be shared by X, Y and Z in the ratio 2 : 1 : 1 respectively. What effect did the goodwill adjustment have on X’s capital account?
- Adecreased by $20\,000
- Bdecreased by $60\,000
- Cincreased by $20\,000
- Dincreased by $60\,000