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, $39,300 Cr.; Zapata, $86,500 Cr.; Fowler, $25,200 Dr.

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

b. What is the amount of cash on hand?

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

Explanation / Answer

Part 1 - Debit Balance in capital account of fowler's is known as 'Deficiency'.

Part 2 - Calculation of amount of cash on hand

Calculation can be done by analysing the capital balances of partners as per basic accounting equation

[Capital + liabilities = Assets]

Part 3 - Journal entry Worksheet to make the sufficient cash balance for distribution of cash to lewis and zapata

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