Gary,Peter,and Chris Own a Firm as Partners

question 101

Multiple Choice

Gary,Peter,and Chris own a firm as partners.Gary has a capital balance of $22,000;Peter a capital balance of $42,000;and Chris has a capital balance of $32,000.As per the partnership agreement,Gary gets a profit share of 2/9;Peter has 4/9;and Chris has 3/9.Which of the following is true,if Gary withdraws from the partnership by receiving $22,000?

• A)Peter,Capital and Chris,Capital will be credited for $11,000 each.
• B)Gary,Capital will be debited for $22,000.
• C)Cash is debited for $22,000.
• D)Peter,Capital will be credited for $22,000.

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Definitions:

Lien

A legal right or interest that a creditor has in the debtor's property, generally lasting until the debt that it secures is satisfied.

Land

The surface of the earth, extending downward to the center and upward indefinitely into space, inclusive of natural resources and fixtures.

Deed of Trust

A legal document in some states that transfers the title of real property to a trustee as security for a loan until the grantor repays the lender.

Third Party

An individual or group besides the two primarily involved in a situation or contract, often with a lesser direct interest.