Joan contributes cash of $48,000,and Jamie contributes office equipment that cost $40,000 but is valued at $32,000 to the formation of a new partnership.The entry to record the investments in the partnership is:

Question

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The entry to record Joan's cash contribution is to debit Cash for $48,000, and credit Joan's Capital account for $48,000. The entry to record Jamie's contribution is to debit Office Equipment for $32,000 (fair market value), debit Loss on Valuation for $8,000 ($40,000 cost - $32,000 fair market value), and credit Jamie's Capital account for $40,000. Therefore, the entry to record the investments in the partnership is:

Debit Cash $48,000
Debit Office Equipment $32,000
Debit Loss on Valuation $8,000
Credit Joan's Capital $48,000
Credit Jamie's Capital $40,000

This is the entry shown in option B.

Joan Contributes Cash of $48,000,and Jamie Contributes Office Equipment That