Question
Lewis, Zapata, and Fowler share equally in net income and net losses. After the partnership sells all assets for cash, divides the losses on realization,
Lewis, Zapata, and Fowler 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: Lewis, $76,580 Cr.; Zapata, $35,050 Cr.; Fowler, $16,980 Dr.
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A. | What term is applied to the debit balance in Fowlers capital account? | |||||||||||||||||||||||||||||||||||||||||||||
B. | What is the amount of cash on hand? | |||||||||||||||||||||||||||||||||||||||||||||
C. | On December 31, journalize the transaction that must take place for Lewis and Zapata to receive cash in the liquidation process equal to their capital account balances. Refer to the Chart of Accounts for exact wording of account titles. Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $36,400 and $28,100 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:1. The two members withdrew amounts equal to their salary allowances. Note: The reduction in members equity from withdrawals would be disclosed on the statement of members equity.
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