Reference no: EM132891283
Bruce contributes ?120,000 cash, land which he bought for ?750,000, and a building that cost him ?1,260,000 and has been depreciated ?260,000, to the newly formed partnership of Avengers Corporation. The building has an outstanding mortgage of ?500,000. The land is valued at ?860,000, while the building is ?1,350,000.
Tony contributes ?250,000 cash and equipment valued at ?750,000 with an outstanding note payable of ?350,000. The original cost of the equipment was ?1,200,000 and has been depreciated by ?200,000. The partners have agreed to share profits and losses equally. All obligations attached to contributed assets are assumed by the new partnership.
Question 1. The entry to record the investment by Bruce includes a debit to:
a. Building, ?1,000,000.
b. Various asset accounts, ?2,120,000.
c. Building, ?1,260,000
d. Various asset accounts, ?2,330,000.
Question 2. Immediately after the investments by Bruce and Tony, the balance sheet of Avengers Company shows total liabilities of
a. 2,480,000
b. 850,000
c. 500,000
d. 350,000
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