1 Fontaine and Monroe are forming a partnership Fontaine inv

1/ Fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market value of $356,000; the partnership assumes responsibility for a $128,000 note secured by a mortgage on the property. Monroe invests $103,000 in cash and equipment that has a market value of $78,000. For the partnership, the amounts recorded for the building and for Fontaine\'s Capital account are:

Multiple Choice

Building $356,000; Fontaine, Capital $309,000.

Building $356,000; Fontaine, Capital $356,000.

Building $228,000; Fontaine, Capital $128,000.

Building $228,000; Fontaine, Capital $228,000.

Building $356,000; Fontaine, Capital $228,000.

2/ Barber and Atkins are partners in an accounting firm and share net income and loss equally. Barber\'s beginning partnership capital balance for the current year is $306,000, and Atkins\' beginning partnership capital balance for the current year is $350,000. The partnership had net income of $130,000 for the year. Barber withdrew $75,000 during the year and Atkins withdrew $118,000. What is Barber\'s return on equity?

Multiple Choice

21.6%

10.8%

21.2%

22.0%

20.1%

Solution

1 Building $356,000; Fontaine, Capital $228,000(356000-128000) 2 Ending capital balance = 306000+65000-75000= 296000 Average capital balance = (306000+296000)/2= 301000 Return on equity = 65000/301000= 21.6%