Henry, Luther, and Gage Are Dissolving Their Partnership

question 156

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

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Definitions:

Negative Proposition

A statement in logic that denies or negates a relationship or attribute between subjects.

Swimming

The act of moving through water by using the limbs.

Boating

The recreational practice or occupation of traveling by boat, especially on lakes, rivers, or the sea.

Disjunctive Syllogism

A form of reasoning wherein from two statements, one necessarily follows as a conclusion if the other is ruled out.