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 total assets and for total capital account are:
A) Total assets $405,000; total capital $305,000.
B) Total assets $305,000; total capital $230,000.
C) Total assets $350,000; total capital $350,000.
D) Total assets $350,000; total capital $275,000.
E) Total assets $405,000; total capital $330,000.

Question

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 total assets and for total capital account are:
A) Total assets $405,000; total capital $305,000.
B) Total assets $305,000; total capital $230,000.
C) Total assets $350,000; total capital $350,000.
D) Total assets $350,000; total capital $275,000.
E) Total assets $405,000; total capital $330,000.

Quizplus · Accepted Answer

The total assets are calculated as the sum of the building's market value ($250,000), Monroe's cash investment ($100,000), and the equipment's market value ($55,000), totaling $405,000. The total capital is the total assets minus the mortgage liability ($75,000), resulting in $330,000.

Fontaine and Monroe Are Forming a Partnership