Fontaine and Monroe are forming a partnership.Fontaine invests a building that has a market value of $250,000;the partnership assumes responsibility for a $75,000 note secured by a mortgage on the property.Monroe invests $100,000 in cash and equipment that has a market value of $55,000.For the partnership,the amounts recorded for Fontaine's Capital account and for Monroe's Capital account are:
A)Fontaine,Capital $175;Monroe,Capital $45,000.
B)Fontaine,Capital $0;Monroe,Capital $100,000.
C)Fontaine,Capital $250,000;Monroe,Capital $100,000.
D)Fontaine,Capital $250,000;Monroe,Capital $155,000.
E)Fontaine,Capital $175,000;Monroe,Capital $155,000.

Question

Quizplus · Accepted Answer

Fontaine's capital account is credited with the building's market value minus the mortgage ($250,000 - $75,000 = $175,000). Monroe's capital account is credited with the cash and equipment's market value ($100,000 + $55,000 = $155,000).

Fontaine and Monroe Are Forming a Partnership