Mawby, White, and Shelby share equally in net income and net losses. After the partnership sells all

Question:

Mawby, White, and Shelby share equally in net income and net losses. After the partnership sells all assets for cash, divides the losses on realization, and pays the liabilities, the balances in the capital accounts are as follows: Mawby, $21,000 Cr.; White, $57,500 Cr.; Shelby, $14,500 Dr.

a. What term is applied to the debit balance in Shelby's capital account?

b. What is the amount of cash on hand?

c. Journalize the transaction that must take place for Mawby and White to receive cash in the liquidation process equal to their capital account balances.

Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due.... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...