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Elden [556K]
3 years ago
9

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, $174,000; Chong, $162,000; and Aaron, $(66,000). After all assets are sold and liabilities are paid, there is $270,000 in cash to be distributed. Aaron is unable to pay the deficiency. The journal entry to record the distribution should be:
Business
1 answer:
il63 [147K]3 years ago
4 0

Answer and Explanation:

The journal entry is shown below:

Peter ($174,000 - ($66,000 ÷ 2)) $141,000

Chong ($162,000 - ($66,000 ÷ 2)) $129,000

        To Cash $270,000

(Being the distribution should be recorded)

For this the capital accounts are debited as it reduced the stockholder equity and credited the cash as it also decreased the assets

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