Fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market value of $250,000; the partnership assumes responsibility for a $75,000 note secured by a mortgage on the property. Monroe invests $100,000 in cash and equipment that has a market value of $55,000. For the partnership, the amounts recorded for the building and for Fontaine's Capital account are:

a. Building $250,000; Fontaine, Capital $250,000. b. Building $175,000; Fontaine, Capital $175,000. c. Building $250,000; Fontaine, Capital $75,000. d. Building $250,000; Fontaine, Capital $175,000. e. Building $175,000; Fontaine, Capital $75,000

Question

Business

Rohan Potter

24 March, 16:28

Fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market value of $250,000; the partnership assumes responsibility for a $75,000 note secured by a mortgage on the property. Monroe invests $100,000 in cash and equipment that has a market value of $55,000. For the partnership, the amounts recorded for the building and for Fontaine's Capital account are:

a. Building $250,000; Fontaine, Capital $250,000. b. Building $175,000; Fontaine, Capital $175,000. c. Building $250,000; Fontaine, Capital $75,000. d. Building $250,000; Fontaine, Capital $175,000. e. Building $175,000; Fontaine, Capital $75,000

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Answers (1)

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Sheldon Olsen · Answer 1

d. Building $250,000; Fontaine, Capital $175,000

Explanation:

the partnership should record the building at the market value of $250,000 and:

Fontaine capital = market value of the building - mortgage responsibility on the property

= $250,000 - $75,000

= $175,000