Question

Masters, Hardy, and Rowen are dissolving their partnership. Their partnership agreement allocates income and losses equally among the partners. The current period's ending capital account balances are Masters, $15,000; Hardy, $15,000; Rowen, $(2,000). After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $28,000 in cash to be distributed. Rowen pays $2,000 to cover the deficiency in his account. The general journal entry to record the final distribution would be:

Answer 1

Answer:

a. Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; credit Cash $30,000.

Explanation:

Given options:

a. Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; credit Cash $30,000.

b. Debit Masters, Capital $14,000; debit Hardy, Capital $14,000; credit Cash $28,000.

c. Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; credit Rowen, Capital $2,000; credit Cash $28,000.

d. Debit Cash $28,000; debit Rowen, Capital $2,000; credit Masters, Capital $15,000; credit Hardy, Capital $15,000.

e. Debit Masters, Capital $9,334; debit Hardy, Capital $9,333; debit Rowen, Capital $9,333; credit Cash $28,000.

The journal entry to record the final distribution is shown below:

Master capital Dr $15,000

Hardy capital Dr $15,000

        To Cash $30,000

(Being the final distribution is recorded)

Here debited both capital as it reduced the stockholder equity also it decreased the assets

Hence, the correct option is a.