Question

Use the following information to answer the following questions.

Steven contributed a building, inventory, and $65,000 cash to a partnership. The building had a book value of $250,000 and a market value of $275,000. The inventory had a book value of $40,000, and a market value of $28,000. The partnership also assumed a $170,000 mortgage note payable owed by Smith that was used originally to purchase the equipment. (Enter answers in whole numbers, no decimals, no currency sign; example 50,000).

a.What debit amount will be recorded to the inventory account? $

b.What debit amount will be recorded to building account? $

c. What credit amount will be recorded to Steven's capital account ? $

Answer 1

Answer:

Explanation:

Steven contributed building and cash of $65,000

Book value of building = $250,000

Market value of building = $275,000

Book value of inventory = $40,000

Market value of inventory = $28,000

Mortgage note payable (used to purchase building = $170,000

All assets brought in by the partners are recorded at their market values.

a) Hence, amount to be debited to inventory account = $28,000

b) Amount to be debited to building account = $275,000

c) Amount to be recorded to Steven's Capital = Market value of building+Market value of inventory+Cash- Mortgage note payable (used to purchase building

= 275,000+28,000+65,000-170,000

= $198,000