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8 January, 13:27

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:

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  1. 8 January, 13:45
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    The balance of Maxwell's Capital account will be $124,000

    Explanation:

    The computation of the Maxwell capital account balance is shown below:

    = Market value of the building - mortgage on the building

    = $180,000 - $56,000

    = $124,000

    The cash invested by the smart is not considered in the computation part because the question has asked for the Maxwell, not for smart. So, we ignored it.
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