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Answer :
Answer:
$362,000 building and $231,000 in Fontaine's capital account
Explanation:
Fontaine and Monroe are forming a partnership
Fontaine invests a building that has a market value of $362,000
The partnership assumes responsibility of $131,000 note
Monroe invests $106,000 in both cash and equipment
The market value is $81,000
Therefore, since the building has a market value of $362,000 then, the amount that is recorded for the building is $362,000
The amount recorded for Fontaine's capital account can be calculated as follows
= $362,000-$131,000
= $231,000
Hence the amount recorded in the building and Fontaine's capital account is $362,000 and $231,000 respectively
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Fontaine's Capital account is credited with $231,000, reflecting the market value of the building he invested ($362,000) minus the mortgage note assumed by the partnership ($131,000). Monroe's investment totals $187,000 in cash and equipment.
The question relates to the accounting and bookkeeping practices for a new partnership between Fontaine and Monroe. When Fontaine invests a building with a market value of $362,000, it is recorded as an asset at that market value on the partnership's balance sheet. However, the partnership assumes responsibility for a $131,000 note secured by a mortgage on the property, which is a liability. Consequently, Fontaine's capital account will be credited with the net value of his investment, which is the market value of the building ($362,000) minus the liability assumed ($131,000), resulting in an entry of $231,000.
Monroe invests $106,000 in cash and equipment worth $81,000. These contributions are added together for the initial value of Monroe's capital account, amounting to a total of $187,000 ($106,000 + $81,000).
In summary, the amounts recorded for Fontaine and Monroe in the partnership accounts are $231,000 in Fontaine's Capital account (market value of the building minus the note) and the building asset would be recorded at the market value of $362,000.
