Miller and Reising formed a partnership.Miller contributed land valued at $90,000 and a building valued at $115,000.Reising contributed $90,000 cash.In addition,the partnership assumed responsibility for Miller's $85,000 mortgage payable associated with the land and building.What are the balances of the partners' capital accounts after these transactions have been recorded?
A)Miller: $120,000; Reising: $90,000.
B)Miller: $205,000; Reising: $90,000.
C)Miller: $105,000; Reising: $105,000.
D)Miller: $90,000; Reising: $120,000.
E)Miller: $90,000; Reising: $205,000.

Question

Quizplus · Accepted Answer

Miller's capital account is credited with the value of the land and building ($90,000 + $115,000 = $205,000) minus the mortgage assumed by the partnership ($85,000), resulting in $120,000. Reising's capital account is credited with the cash contribution of $90,000.

Miller and Reising Formed a Partnership