JAMB - Accounts Principles Of Accounts (1994 - No. 25)
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
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
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.
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