Chen and Wright are forming a partnership. Chen will invest a building that currently is being used in another business owned by Chen. The building has a cost of $18,000 and fair market value of $35,000. Also, the partnership will assume responsibility for a $15,000 loan secured by a mortgage on the building. Wright will invest $10,000 cash. On the books of the partner- ship, the amount to be recorded for the building and credit to Chen's capital account would include: Debit - Building $18,000; Credit - Chen, Capital $3,000. Debit - Building $18,000; Credit - Chen, Capital $15,000. Debit - Building $18,000; Credit - Chen, Capital $18,000. Debit - Building $35,000; Credit - Chen, Capital $20,000. O Debit - Building $35,000; Credit - Chen, Capital $35,000.

Chen and Wright are forming a partnership. Chen will invest a building that currently is being used in another business owned by Chen. The building has a cost of $18,000 and fair market value of $35,000. Also, the partnership will assume responsibility for a $15,000 loan secured by a mortgage on the building. Wright will invest $10,000 cash. On the books of the partner- ship, the amount to be recorded for the building and credit to Chen's capital account would include: Debit - Building $18,000; Credit - Chen, Capital $3,000. Debit - Building $18,000; Credit - Chen, Capital $15,000. Debit - Building $18,000; Credit - Chen, Capital $18,000. Debit - Building $35,000; Credit - Chen, Capital $20,000. O Debit - Building $35,000; Credit - Chen, Capital $35,000.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 23P

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