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Question
Jane, Castle, and Sean 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 Jane, $54,000; Castle, $42,000; and Sean, $(6,000). After all assets are sold and liabilities are paid, there is $90,000 in cash to be distributed. Sean is unable to pay the deficiency. The journal entry to record the distribution should be:
A. Debit Jane, Capital $54,000; debit Castle, Capital $36,000; credit Cash $90,000.
B. Debit Jane, Capital $54,000; debit Castle, Capital $42,000; credit Cash $96,000.
C. Debit Jane, Capital $51,000; debit Castle, Capital $39,000; credit Cash $90,000.
D. Debit Cash $90,000, debit Sean, Capital $6,000, credit Jane, Capital $54,000, credit Castle, Capital $42,000.
E. Debit Cash $90,000; credit Jane, Capital $30,000; credit Castle, Capital $30,000; credit Sean, Capital $30,000.
Answer
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Related questions
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