Partners Eric and Jeremy Each Have $3,000 Capital Balances and Share

question 11

Multiple Choice

Partners Eric and Jeremy each have $3,000 capital balances and share income and losses in a 2:1 ratio,respectively.Cash equals $1,000,noncash assets are $10,000,and liabilities are $5,000.If all the noncash assets are sold for $4,000,and each partner is personally insolvent,Jeremy eventually will receive cash of:

• A)$0.
• B)$1,000.
• C)$1,500.
• D)$2,000.

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Definitions:

T Accounts

A visual representation used in accounting to depict the debit and credit sides of accounts, helping to track and manage financial transactions.

Account Affected

The specific ledger account impacted by a financial transaction, indicating where changes in value are recorded.

Debit and Credit

Accounting terms used to record transactions in the accounts, where debits increase asset or expense accounts and decrease liability, equity, or revenue accounts, and credits do the opposite.

Operations

The day-to-day activities involved in running a business that lead to the production of goods and delivery of services.