Chen and Wright Are Forming a Partnership

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 fair market value of$65,000. Also, the partnership will assume responsibility for a $15,000 note secured by a mortgage on the building. Wright will invest $20,000 cash. On the books of thepartnership, the amount to be recorded for the building and credit to Chen's capital account are:

A) $65,000 and $65,000.
B) $50,000 and $20,000.
C) $20,000 and $65,000.
D) $50,000 and $40,000.
E) $65,000 and $50,000.

Correct Answer:

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