Question no. 7

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.

Note: Capital A/C has Normal Credit balances, therefore, a debit balance in Farly's capital account shows deficiency of capital.

Instructions:

Prepare the journal entry to record.