Answer:
Option C
$28,000
Explanation:
As for the information provided,
We have,
New partner to be admitted is Erin and his share will be 1/5th
For this he brings in $38,000.
Therefore, total capital will be = [tex]38,000 \times 5 = 190,000[/tex]
But actual capital after his addition = $140,000 + $40,000 + $38,000 = $218,0000
Therefore, value of inventory written off as will reduce assets, and capital also = $218,000 - $190,000 = $28,000.
This will ultimately make the contribution of Erin equivalent to his share.