On November 1, Jackson and Kiln formed a partnership with Jackson contributing land valued at
$180,000 and a building valued at $265,000. Kiln contributed $195,000 in cash. The partnership assumed the mortgage on Jackson's property of $130,000. Profits and losses are to be shared equally. What are the balances of the partner's capital accounts after recording these transactions?

Question

Quizplus · Accepted Answer

Jackson's initial contribution is the combined value of the land and building ($180,000 + $265,000 = $445,000). However, the partnership assumes a mortgage of $130,000, which effectively reduces Jackson's net contribution to $315,000 ($445,000 - $130,000). Kiln's contribution remains at $195,000. Therefore, the capital accounts after recording these transactions are Jackson: $315,000 and Kiln: $195,000.

On November 1, Jackson and Kiln Formed a Partnership with Jackson