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, $54,000; Chong, $42,000; and Aaron, $(2,000). After all assets are sold and liabilities are paid, there is $94,000 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 $54,000; debit Chong, Capital $42,000; credit Cash $96,000.
B. Debit Cash $94,000, debit Aaron, Capital $2,000, credit Peters, Capital $54,000, credit Chong, Capital $42,000.
C. Debit Peters, Capital $53,000; debit Chong, Capital $41,000; credit Cash $94,000.
D. Debit Peters, Capital $54,000; debit Chong, Capital $40,000; credit Cash $94,000.
E. Debit Cash $94,000; credit Peters, Capital $47,000; credit Chong, Capital $47,000.
Answer: C
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