Question

Fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market value of $366,000; the partnership assumes responsibility for a $133,000 note secured by a mortgage on the property. Monroe invests $108,000 in cash and equipment that has a market value of $83,000. For the partnership, the amounts recorded for Fontaine's Capital account and for Monroe's Capital account are:

Answer 1

FONTAINE'S CAPITAL ACCOUNT-

Particulars Amount$

Market value of the building 366,000

Less: Mortgage responsibility (133,000)

on building

Capital Investment 233,000

MONROE'S CAPITAL ACCOUNT-

Particulars Amount$

Cash Investment 108,000

Add: Market value of 83,000

equipment investment

Capital Investment 191,000