Question

On July 1, Mabel and Pierre formed a partnership, agreeing to share profits and losses in the ratio of 4:6, respectively. Mabel contributed a parcel of land that cost her $25,000. Pierre contributed $50,000 cash. The land was sold for $50,000 on July 1, four hours after formation of the partnership. How much should be recorded in Mabel's capital account on the partnership formation?A)$10,000.B)$25,000.C)$50,000.D)$20,000.

Answer 1

Answer:

C. $50,000

Explanation:

The computation of the Mabel's capital account after formation of the partnership account is shown below:

Total contribution by both the partners equals to

= Mabel contribution + Pierre contribution

= $25,000 + $50,000

= $75,000

Mabel contribution = Total contribution × Mabel share ÷ total share

                                = $75,000 × 4 ÷ 10

                                = $30,000

And, the land was sold for $50,000

So, Mabel share on the sale of land = $50,000  × 4 ÷ 10 = $20,000

Total amount recorded = $30,000 + $20,000 = $50,000