Question

Ben and Sam Jenkins formed a partnership. Ben contributed $8,000 cash and a used truck that originally cost $35,000 and had accumulated depreciation of $15,000. The truck’s fair value was $16,000. Sam, a builder, contributed a new storage garage. His cost of construction was $40,000. The garage has a fair value of $55,000. What is the combined total capital that would be recorded on the partnership books for the two partners?

Answer 1

Ben and Sam Jenkins' combined total capital in the partnership would be recorded as $79,000, determined by the fair value of the assets they each contributed: $24,000 from Ben and $55,000 from Sam.

Step-by-step explanation:

The combined total capital that would be recorded on the partnership books for Ben and Sam Jenkins would be calculated based on the fair value of the assets they contributed. Ben contributed $8,000 in cash and a used truck. The cost of the truck is not relevant; what is considered is the fair value which is $16,000. Therefore, Ben's contribution totals to $24,000. Sam contributed a storage garage with a fair value of $55,000, which is what would be recorded for his contribution. Therefore, the combined total capital for the two partners is $24,000 (Ben) + $55,000 (Sam) = $79,000.

Answer 2

The combined total capital that would be recorded on the partnership books for the two partners is $79,000

Step-by-step explanation:

Partnership : In partnership, there are two or more members who are called partners which are ready to share the profit or loss percentage according to their agreed ratio

The combined total capital for both partners is shown below:

= Contributed cash + truck fair value + garage fair value

= $8000 + $ 16,000 + $55,000

= $79,000

The other cost like purchase price, depreciation, construction cost is irrelevant for computation. Thus, these cost will not be considered.

Hence, the combined total capital that would be recorded on the partnership books for the two partners is $79,000