Henry Jones contributed equipment, inventory, and $44,000 cash to the partnership. The equipment had a book value of $35,000 and market value of $28,000. The inventory has a book value of $25,000, but only had a market value of $12,000. due to obsolescence. The partnership also assumed a $15,000 note payable owed by Henry that was originally used to purchase the equipment. What amount should Henry's capital account be recorded?

Question

Quizplus · Accepted Answer

Henry's capital account should be recorded at the market value of the assets contributed minus the liabilities assumed by the partnership. The calculation is: $28,000 (equipment market value) + $12,000 (inventory market value) + $44,000 (cash) - $15,000 (note payable) = $69,000.

Henry Jones Contributed Equipment, Inventory, and $44,000 Cash to the Partnership