Maxwell and Smart are forming a partnership.Maxwell is investing a building that has a market value of $180,000.However,the building carries a $56,000 mortgage that will be assumed by the partnership.Smart is investing $120,000 cash.The balance of Maxwell's Capital account will be:
A)$180,000.
B)$124,000.
C)$56,000.
D)$64,000.
E)$60,000.

Question

Quizplus · Accepted Answer

To find the balance of Maxwell's Capital account, we need to first subtract the mortgage amount from the market value of the building:

$180,000 - $56,000 = $124,000

Then, we need to add in Maxwell's cash contribution, which is $0 (since he didn't contribute any cash).

Therefore, the balance of Maxwell's Capital account will be $124,000.

Maxwell and Smart Are Forming a Partnership