Sam, Bart, and Lex Are Dissolving Their Partnership

question 11

Multiple Choice

Sam, Bart, and Lex 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 Sam, $45,000; Bart, $37,000; and Lex, $(5,000) . After all assets are sold and liabilities are paid, there is $77,000 in cash to be distributed. Lex is unable to pay the deficiency. The journal entry to record the distribution should be:

• A) Debit Sam, Capital $25,667; debit Bart, Capital $25,667; debit Lex, Capital $25,666; credit Cash $77,000.
• B) Debit Sam, Capital $42,500; debit Bart, Capital $34,500; credit Cash $77,000.
• C) Debit Sam, Capital $45,000; debit Bart, Capital $37,000; credit Lex, Capital $5,000; credit Cash $77,000.
• D) Debit Cash $77,000, debit Lex, Capital $5,000, credit Sam, Capital $45,000, credit Bart, Capital $37,000.
• E) Debit Cash $77,000; credit Sam, Capital $25,667; credit Bart, Capital $25,667; credit Lex, Capital $25,666.

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Definitions:

Prefix

A group of letters added to the beginning of a word to alter its meaning, such as "un-" in "unhappy."

Word Root

The base part of a word that holds the primary meaning, to which other parts like prefixes or suffixes can be added.

Combining Form

In linguistics, especially in the formation of compound words, a form of a word that is used in combination with another word to create a new meaning.

Latin

An ancient Italic language of the Roman Empire, used as the language of scholarship and administration until superseded by vernacular languages but surviving today in certain ecclesiastical and academic contexts.