Maxwell and Smart Are Forming a Partnership

question 64

Multiple Choice

Maxwell and Smart are forming a partnership.Maxwell is investing a building that has a market value of $180,000.However,the building carries a $56,000 mortgage that will be assumed by the partnership.Smart is investing $120,000 cash.The balance of Maxwell's Capital account will be:

• A)$180,000.
• B)$124,000.
• C)$56,000.
• D)$64,000.
• E)$60,000.

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Definitions:

Earned Revenue

Income generated from the sale of goods or services related to the core business operations.

Accrued Wages

Wages that have been earned by employees but have not yet been paid by the employer.

Independent Contractor

An individual or entity contracted to perform work for—or provide services to—another entity as a non-employee, thereby offering flexibility and operational advantages for the hiring entity.

Journal Entry

A record in accounting that represents the debit and credit sides of a transaction, reflecting changes in account balances.