Lewis, Zapata, and Fowler share equally in net income and net losses. After the

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, and pays the liabilities, the balances in the capital accounts are as follows: Lewis, $66,130 Cr.; Zapata, $46,460 Cr.; Fowler, $17,730 Dr. What term is applied to the debit balance in Fowler's capital account? What is the amount of cash on hand? 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.

Explanation / Answer

A./

DEBIT BALANCE IN FLOWER'S CAPITAL ACCOUNT IS CALLED AS CAPITAL DEFFICIANCY.

B./

CASH IN HAND

= $66130 +$46460 - $17730

= $94860

C./

ACCOUNT TITLE DEBIT CREDIT LEWIS CAPITAL $66130 ZAPATA CAPITAL $46460 FLOWERS CAPITAL $17730 CASH $94860

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