McCartney,Harris,and Hussin Are Dissolving Their Partnership B) C) D) E)

question 26

Multiple Choice

McCartney,Harris,and Hussin 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 McCartney,$13,000; Harris,$13,000; and Hussin,$(2,000) .After all assets are sold and liabilities are paid,there is $24,000 in cash to be distributed.Hussin is unable to pay the deficiency.The journal entry to record the distribution should be:

• A) \[\begin{array} { | l | c | c | }
• \hline \text {McCartney, Capital} \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 8,000 & \\
• \hline \text {Harris, Capital } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 8,000 & \\
• \hline \text {Hussin, Capital } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 8,000 \\
• \hline \text { \quad Cash } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & & 24,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | c | c | }
• \hline \text {McCartney, Capital} \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 12,000 & \\
• \hline \text {Harris, Capital } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 12,000 & \\
• \hline \text { \quad Cash } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & & 24,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | c | c | }
• \hline \text {McCartney, Capital} \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 13,000 & \\
• \hline \text {Harris, Capital } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 13,000 & \\
• \hline \text {\quad Hussin, Capital } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots && 2,000 \\
• \hline \text { \quad Cash } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & & 24,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | c | c | }
• \hline \text {Cash } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 24,000 \\
• \hline \text {Hussin, Capital } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 2,000 \\
• \hline \text {\quad McCartney, Capital} \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots && 13,000 \\
• \hline \text {\quad Harris, Capital } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots && 13,000 \\
• \hline
• \end{array}\]
• E) \[\begin{array} { | l | c | c | }
• \hline \text {Cash } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & 24,000 \\
• \hline \text {\quad McCartney, Capital} \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots && 8,000 \\
• \hline \text {\quad Harris, Capital } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots && 8,000 \\
• \hline \text {\quad Hussin, Capital } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots & & 8,000 \\
• \hline
• \end{array}\]

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Definitions:

Nominal Variables

Variables measured in monetary terms without adjusting for changes in price levels or inflation.

Inflation Theory

is the set of various theories explaining the cause and effects of increasing prices or inflation in an economy.

Price Level

Reflects the average of current prices across the entire spectrum of goods and services produced in the economy, serving as a measure of inflation.

Value of Money

The purchasing power of money, which can vary over time due to inflation or changes in the economy.