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18 March, 20:05

On July 1, Mabel and Pierre formed a partnership, agreeing to share profits and losses in the ratio of 4:6, respectively. Mabel contributed a parcel of land that cost her $25,000. Pierre contributed $50,000 cash. The land was sold for $50,000 on July 1, four hours after formation of the partnership. How much should be recorded in Mabel's capital account on the partnership formation? A) $10,000. B) $25,000. C) $50,000. D) $20,000.

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  1. 18 March, 20:29
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    C. $50,000

    Explanation:

    The computation of the Mabel's capital account after formation of the partnership account is shown below:

    Total contribution by both the partners equals to

    = Mabel contribution + Pierre contribution

    = $25,000 + $50,000

    = $75,000

    Mabel contribution = Total contribution * Mabel share : total share

    = $75,000 * 4 : 10

    = $30,000

    And, the land was sold for $50,000

    So, Mabel share on the sale of land = $50,000 * 4 : 10 = $20,000

    Total amount recorded = $30,000 + $20,000 = $50,000
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