When Danny Withdrew from John,Daniel,Harry,and Danny LLP,he Was Paid $80,000,although

question 25

Multiple Choice

When Danny withdrew from John,Daniel,Harry,and Danny LLP,he was paid $80,000,although his capital account balance was only $60,000.The four partners shared net income and losses equally.The journal entry of the partnership to record Danny's withdrawal preferably should include :

• A)$6,667 debit to John,Capital.
• B)$6,667 credit to John,Capital.
• C)$6,667 debit to John,Drawing.
• D)$5,000 debit to John,Capital.
• E)$5,000 credit to John,Capital.

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Definitions:

Creditors' Risk

The risk faced by lenders that borrowers may default on their debt obligations, potentially leading to financial losses.

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Owner's Equity

Owner's equity represents the owner's claims on the assets of the business, calculated as total assets minus total liabilities.

Creditors' Risk

The level of risk that creditors face regarding the possibility of not receiving back the principal and/or interest on loans issued to borrowers.