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Lance contributed investment property worth $500,000 purchased three years ago for $200,000 cash, to Cloud Peak LLC in exchange for an 85 percent profits and

Lance contributed investment property worth $500,000 purchased three years ago for $200,000 cash, to Cloud Peak LLC in exchange for an 85 percent profits and capital interest in the LLC. Cloud Peak owes $300,000 to its suppliers but has no other debts.

Assume Lance pays off $50,000 of the recourse debt with cash. What is the journal entry for this? What effect does it have on the partner's basis and why?

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