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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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Multiple Choice - 4 Points Each 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. Debit - Building $35,000; Credit - Chen, Capital $35,000.
Transcribed Image Text:Multiple Choice - 4 Points Each 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. Debit - Building $35,000; Credit - Chen, Capital $35,000.
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