Griffin and Rhodes formed a partnership on January 1,2009.Griffin contributed cash of $120,000 and Rhodes contributed land with a fair value of $160,000.The partnership assumed the mortgage on the land which amounted to $40,000 on January 1.Rhodes originally paid $90,000 for the land.On July 31,2009,the partnership sold the land for $190,000.Assuming Griffin and Rhodes share profits and losses equally,how much of the gain from sale of land should be credited to Griffin for financial accounting purposes?

Question

Quizplus · Accepted Answer

The gain on the sale of land is $190,000 - $160,000 = $30,000. Since Griffin and Rhodes share profits and losses equally, Griffin should be credited with half of the gain, which is $30,000 / 2 = $15,000.

Griffin and Rhodes Formed a Partnership on January 1,2009