Peters, Chong, and Aaron Are Dissolving Their Partnership

question 139

Multiple Choice

Peters, Chong, and Aaron are dissolving their partnership. Their partnership agreement allocates each partner an equal share of all income and losses. The current period's ending capital account balances are Peters, $54,000; Chong, $42,000; and Aaron, $(2,000) . After all assets are sold and liabilities are paid, there is $94,000 in cash to be distributed. Aaron is unable to pay the deficiency. The journal entry to record the distribution should be:

• A) Debit Peters, Capital $54,000; debit Chong, Capital $40,000; credit Cash $94,000.
• B) Debit Peters, Capital $53,000; debit Chong, Capital $41,000; credit Cash $94,000.
• C) Debit Cash $94,000; credit Peters, Capital $47,000; credit Chong, Capital $47,000.
• D) Debit Cash $94,000, debit Aaron, Capital $2,000, credit Peters, Capital $54,000, credit Chong, Capital $42,000.
• E) Debit Peters, Capital $54,000; debit Chong, Capital $42,000; credit Cash $96,000.

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Definitions:

Right-Skewed

A description of a distribution of data where the tail on the right side of the histogram is longer or fatter than the left side, indicating that the mean is greater than the median.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values in the data set deviate from the mean.

Mean

A measure of central tendency that is calculated by dividing the sum of all values in a dataset by the number of values.

Right-Skewed

Refers to a distribution where the tail on the right side of the histogram is longer or fatter than the left side.