Chen and Wright Are Forming a Partnership

question 25

Multiple Choice

Chen and Wright are forming a partnership. Chen will invest a building that currently is being used by another business owned by Chen. The building has a market value of $90,000. Also, the partnership will assume responsibility for a $30,000 note secured by a mortgage on that building. Wright will invest $50,000 cash. For the partnership, the amounts to be recorded for the building and for Chen's Capital account are:

• A) Building, $90,000 and Chen, Capital, $90,000.
• B) Building, $60,000 and Chen, Capital, $60,000.
• C) Building, $60,000 and Chen, Capital, $50,000.
• D) Building, $90,000 and Chen, Capital, $60,000.
• E) Building, $60,000 and Chen, Capital, $90,000.

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Definitions:

Oxygen-rich Blood

Blood that has been oxygenated in the lungs and is then transported by the arteries to deliver oxygen to cells throughout the body.

Pulmonary Trunk

The blood vessel that carries blood from the right ventricle of the heart to the lungs for oxygenation.

Inferior Venae Cavae

A large vein that carries deoxygenated blood from the lower half of the body to the right atrium of the heart.

Pulmonary Veins

Blood vessels that carry oxygenated blood from the lungs to the left atrium of the heart.