Joe and Clara contribute property to form JC Partnership on January 1, 2019. Joe contributes land with a basis and FMV of $60,000. The land is encumbered by a $35,000 loan. Clara on the other hand contributed $25,000 cash. During 2019, JC Partnership borrowed $100,000 to construct a parking lot on the land. At the end of 2019, JC Partnership had payables of $10,000 owing to various suppliers. During 2020, JC Partnership paid back all of its loans and payables outstanding and made a distribution to Joe of $120,000 and to Clara of $90,000. JC Partnership had a total net income of $150,000 for 2020. There was zero net income in 2019. Required: First, calculate each of Joe's and Clara's basis in the partnership as of

Joe and Clara contribute property to form JC Partnership on January 1, 2019. Joe contributes land with a basis and FMV of $60,000. The land is encumbered by a $35,000 loan. Clara on the other hand contributed $25,000 cash. During 2019, JC Partnership borrowed $100,000 to construct a parking lot on the land. At the end of 2019, JC Partnership had payables of $10,000 owing to various suppliers. During 2020, JC Partnership paid back all of its loans and payables outstanding and made a distribution to Joe of $120,000 and to Clara of $90,000. JC Partnership had a total net income of $150,000 for 2020. There was zero net income in 2019. Required: First, calculate each of Joe's and Clara's basis in the partnership as of

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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On July 1, 2019, Olga, Mega and Giga formed the OMG Partnership, by combining their separate business proprietorships. Olga contributed cash of P150,000. Mega contributed property with a carrying amount of P108,000, original cost of P120,000. and a fair value of P240,000. The partnership accepted responsibility for the P105,000 mortgage attached to the property. Giga contributed equipment with a carrying amount of P90,000, original cost of P225,000 and fair market value of P165,000. The partnership agreement specifies that profits and losses are to be shared equally. How much is the investment of Mega?
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