Kat and Stevens agree to accept Nugent as a partner upon his investment of $50,0

Question

Kat and Stevens agree to accept Nugent as a partner upon his investment of $50,000 cash. Nugent is to receive a 20% ownership interest in the new partnership. Any bonus is attributable to the existing partners and is shared equally. Kat and Stevens combined capital (before Nugents investment) totals $180,000.

A Nugent's credit to Capital equals $50,000

B Nugent's credit to Capital equals $46,000

C Total Partnership capital would increase by $46,000

D Total Partnership capital would decrease by $50,000

Explanation / Answer

answer is B Nugent's credit to Capital equals $46,000

prior capital = 180000

new capital = 50000

total new capital = 230000

Nugent's capital = 230000*20% = 46000

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