Masters, Hardy, and Rowen Are Dissolving Their Partnership

question 67

Multiple Choice

Masters, Hardy, and Rowen are dissolving their partnership. Their partnership agreement allocates income and losses equally among the partners. The current period's ending capital account balances are Masters, $15,000; Hardy, $15,000; Rowen, $(2,000) . After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $28,000 in cash to be distributed. Rowen pays $2,000 to cover the deficiency in his account. The general journal entry to record the final distribution would be:

• A) Debit Masters, Capital $14,000; debit Hardy, Capital $14,000; credit Cash $28,000.
• B) Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; credit Rowen, Capital $2,000; credit Cash $28,000.
• C) Debit Masters, Capital $9,334; debit Hardy, Capital $9,333; debit Rowen, Capital $9,333; credit Cash $28,000.
• D) Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; credit Cash $30,000.
• E) Debit Cash $28,000; debit Rowen, Capital $2,000; credit Masters, Capital $15,000; credit Hardy, Capital $15,000.

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Definitions:

Board of Governors

The leading body of the Federal Reserve System, responsible for overseeing the Federal Reserve Banks and setting monetary policy.

Federal Reserve

The Federal Reserve, often referred to as "the Fed," is the central banking system of the United States, responsible for managing the country's money supply and monetary policy.

Medium of Exchange

A mediating tool or mechanism designed to support the buying, selling, or exchanging of goods and services among participants.

Easily Divisible

Characteristic of a good or asset that can be divided into smaller parts without losing its value proportionately.