Prior to the distribution of cash to the partners, the accounts in the NJF Company are: Cash

Question:

Prior to the distribution of cash to the partners, the accounts in the NJF Company are:

Cash $28,000, Newell Capital (Cr.) $17,000, Jennings Capital (Cr.) $15,000, and Farley Capital (Dr.) $4,000.The income ratios are 5:3:2, respectively.

Instructions

(a) Prepare the entry to record

(1) Farley’s payment of $4,000 in cash to the partnership and

(2) The distribution of cash to the partners with credit balances.

(b) Prepare the entry to record

(1) The absorption of Farley’s capital deficiency by the other partners and

(2) The distribution of cash to the partners with credit balances.

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... 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...