Peters, Chong, and Aaron are dissolving their partnership. Their partnership agreement allocates each partner an equal share of all income and losses. The current period's ending capital account balances are Peters, $60,000; Chong, $48,000; and Aaron, $(9000). After all assets are sold and liabilities are paid, there is $99,000 in cash to be distributed. Aaron is unable to pay the deficiency. The journal entry to record the distribution should be:
A. Debit Peters, Capital $60,000; debit Chong, Capital $39,000; credit Cash $99,000.
B. Debit Peters, Capital $60,000; debit Chong, Capital $48,000; credit Cash $108,000.
C. Debit Cash $99,000; credit Peters, Capital $33,000; credit Chong, Capital $33,000.
D. Debit Cash $99,000, debit Aaron, Capital $9000, credit Peters, Capital $60,000, credit Chong, Capital $48,000.
E. Debit Peters, Capital $55,500; debit Chong, Capital $43,500; credit Cash $99,000.
Answer: E
You might also like to view...
Explain the function of each phase of an application letter written in the AIDA format
What will be an ideal response?
An asset's book value is $36,000 on January 1, Year 6. The asset is being depreciated $500 per month using the straight-line method. Assuming the asset is sold on July 1, Year 7 for $25,000, the company should record:
A. A loss on sale of $2,000. B. Neither a gain or loss is recognized on this type of transaction. C. A loss on sale of $1,000. D. A gain on sale of $2,000. E. A gain on sale of $1,000.
Which of the following is true about pay grades?
A. Pay grades are easy to design. B. Pay grades restrict an organization's ability to move people between jobs. C. Pay grades makes the pay structure inflexible. D. Pay grades are created by grouping jobs considered substantially equal. E. Jobs within a single pay grade may have different pay ranges.
Which of the following is not currently a key labour market trend in the UK:
a. workforce ageing b. rise in dual-career couples c. reduction in female labour market participation d. rise in working single parents