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
-
A.
N32,000 -
B.
N40,000 -
C.
N42,000 -
D.
N50,000
Correct Answer: Option 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.