Thomas Engel contributed equipment, inventory, and $45,000 cash to a partnership. The equipment had a book value of $25,000 and market value of $30,000. The inventory has a book value of $50,000 but only had a market value of $25,000 due to obsolescence. The partnership also assumed a $20,000 note payable owed by Thomas that was originally used to purchase the equipment. What amount(s) should be recorded in Thomas's capital account

Thomas capital

Equipment                $30,000

Inventory                   25,000

Cash                         45,000

Total                        100,000

Explanation:

Equipment : thebook value is $25,000 while the market value is $30,000.  the market value of the equipment will be used.

Inventory : the book value is $50,000 while the market value is $25,000. As a result of obsolescence, the inventory will be value at lower of cost and net realizable value(IAS2). therefore, $25,000 will be recognized for the inventory in the determination of Thomas capital

Cash: there is no changes in cash contributed.

Explanation:

Cash contribution by Thomas = $45,000

Market value of the Inventory amount to = $ 25,000

Market value of the Equipment= $ 30,000

Notes payable by Thomas for the purchase of the equipment = $ 20,000

hence the amount recorded in Thomas account would be = 45000 + 25000 + 30000 + 20000

= $120,000

engaging in financial planning?

just took my test