Question

he building is subject to a mortgage of $10,000, which the partnership has assumed. The partnership agreement also specifies that profits and losses are to be distributed evenly without a true up payment. What amounts shoul

Answer 1

I. $35,000; II. $75,000

Step-by-step explanation:

Calculation to determine What amounts should be recorded as capital for Roberts and Smith at the formation of the partnership

ROBERTS net assets contributed= ($20,000 + $15,000)

Roberts net assets contributed=$35,000

SMITH fair market value of the net assets contributed = ($30,000 + $15,000 + $40,000 - $10,000)

Smith fair market value of the net assets contributed=$75,000

Therefore the amount tha should be recorded as capital for Roberts and Smith at the formation of the partnership is $35,000;$75,000