Henry,Luther,and Gage Are Dissolving Their Partnership

question 72

Multiple Choice

Henry,Luther,and Gage are dissolving their partnership.Their partnership agreement allocates each partner 1/3 of all income and losses.The current period's ending capital account balances are Henry,$45,000;Luther,$37,000;and Gage,$(5,000) .After all assets are sold and liabilities are paid,there is $77,000 in cash to be distributed.Gage is unable to pay the deficiency.The journal entry to record the distribution should be:

• A)Debit Henry,Capital $25,667;debit Luther,Capital $25,667;debit Gage,Capital $25,666;credit Cash $77,000.
• B)Debit Henry,Capital $42,500;debit Luther,Capital $34,500;credit Cash $77,000.
• C)Debit Henry,Capital $45,000;debit Luther,Capital $37,000;credit Gage,Capital $5,000;credit Cash $77,000.
• D)Debit Cash $77,000,debit Gage,Capital $5,000,credit Henry,Capital $45,000,credit Luther,Capital $37,000.
• E)Debit Cash $77,000;credit Henry,Capital $25,667;credit Luther,Capital $25,667;credit Gage,Capital $25,666.

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