Kayode, Akpan and Kachalla are in partnership. Their respective capital accounts had the following balances: N40,000, N50,000 and N70,000.
The partners agree to admit Wamo as a new partner with a one-fifth interest in the partnership capital in exchange for N50,000 cash. Wamo’s equity in the resulting partnership is
- N32,000
- N40,000
- N42,000
-
N50,000
The correct answer is: D
Explanation
Equity is the same as capital. This is funds paid into a business by investors in exchange for common or preferred stock.
50,000 is Wamo's equity contribution.