Collins and Farina are forming a partnership.Collins is investing a building that has a market value of $80,000 and a book value of $65,000.However,the building carries a $56,000 mortgage that will be assumed by the partnership.Farina is investing $20,000 cash.Total capital in the partnership will be:
A)$80,000
B)$24,000
C)$56,000
D)$44,000
E)$60,000

Question

Quizplus · Accepted Answer

The building has a market value of $80,000, but the partnership will only assume the mortgage of $56,000. So, Collins' investment is $80,000 - $56,000 = $24,000. Farina's investment is $20,000. Total capital in the partnership is $24,000 + $20,000 = $44,000.

Collins and Farina Are Forming a Partnership