Question

Henry Jones contributed equipment, inventory, and $44,000 cash to a partnership. The equipment had a book value of $35,000 and a market value of $28,000. The inventory has a book value of $25,000, but only had a market value of $12,000 due to obsolescence. The partnership also assumed a $15,000 note payable owed by Henry that was originally used to purchase the equipment.What amount should Henry's capital account be recorded?a. $69,000b. $104,000c. $84,000d. $89,000

Answer 1

$69,000

Step-by-step explanation:

Data provided in the question:

Cash Contribution by Henry = $44,000

Book value of the equipment = $35,000

Market value of equipment = $28,000

Book value of the inventory = $25,000

Market value of inventory = $12,000

Note payable owed by Henry = $15,000

Now,

Market values of the contributed assets and liabilities at the date of contribution are recorded

thus,

Henry's capital account be recorded

= Cash Contribution by Henry + Market value of equipment + Market value of inventory - Note payable owed by Henry

= $44,000 + $28,000 + $12,000 - $15,000

= $69,000