After Closing the Temporary Owners' Equity Accounts into Income Summary

question 46

Multiple Choice

After closing the temporary owners' equity accounts into Income Summary, and after allocating the net income and closing the partners' drawing accounts, assume the partners' capital accounts had credit balances as follows: Sanchez, $20,000; Dorvinsky, $30,000; Davenport, $45,000. Partners share profits and losses as follows: Sanchez, 20%; Dorvinsky, 30%; and Davenport, 50%. If Davenport retired and withdrew $40,000 in settlement of his/her equity and settlements are allocated according to capital interests, the amount entered in Dorvinsky's capital account would be a

• A) $2,000 credit.
• B) $2,000 debit.
• C) $3,000 credit.
• D) $3,000 debit.

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Definitions:

IQR

The interquartile range, a measure of variability, expressed as the difference between the 25th and 75th percentiles of the data.

Median

The middle value in a data set, which divides the data into two halves when arranged in order.

Mean

The arithmetic average of a set of numbers, calculated by dividing the sum of all the values by the count of numbers.

Range

The difference between the highest and lowest values in a set of numbers.