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Marie and Gina are event stylists and have decided to commence a partnership.Marie is contributing cash of $14,000 and a business loan of $6,000, while Gina is contributing equipment (cost of $8,000 and market value of $10,000) and accounts receivable of $3,000.What amount would be credited to Gina's capital account?(Enter numbers only without any symbols, e.g. 1234)

Question

Marie and Gina are event stylists and have decided to commence a partnership.Marie is contributing cash of 14,000andabusinessloanof14,000 and a business loan of 6,000, while Gina is contributing equipment (cost of 8,000andmarketvalueof8,000 and market value of 10,000) and accounts receivable of $3,000.What amount would be credited to Gina's capital account?(Enter numbers only without any symbols, e.g. 1234)

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Solution 1

The amount credited to Gina's capital account would be the total value of her contributions to the partnership.

Here's the step-by-step calculation:

  1. Determine the value of each of Gina's contributions. In this case, she is contributing equipment and accounts receivable.

  2. The equipment has a cost of 8,000,butitsmarketvalueis8,000, but its market value is 10,000. When contributing assets to a partnership, the market value is typically used. So, the value of the equipment contribution is $10,000.

  3. Gina is also contributing accounts receivable of $3,000.

  4. Add the value of the equipment and the accounts receivable to find the total value of Gina's contributions.

10,000(equipment)+10,000 (equipment) + 3,000 (accounts receivable) = $13,000

So, $13,000 would be credited to Gina's capital account.

This problem has been solved

Solution 2

The amount credited to Gina's capital account would be the total value of her contributions to the partnership.

Here's the step-by-step calculation:

  1. Determine the value of each of Gina's contributions. In this case, she is contributing equipment and accounts receivable.

  2. The equipment has a cost of 8,000,butitsmarketvalueis8,000, but its market value is 10,000. When contributing assets to a partnership, the market value is typically used. So, the value of the equipment contribution is $10,000.

  3. Gina is also contributing accounts receivable of $3,000.

  4. Add the value of the equipment and the accounts receivable to find the total value of Gina's contributions.

10,000(equipment)+10,000 (equipment) + 3,000 (accounts receivable) = $13,000

So, $13,000 would be credited to Gina's capital account.

This problem has been solved

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