Henry, Luther, and Gage are dissolving their partnership. Their partnership agreement allocates each partner 1/3 of all income and losses. The current period's ending capital account balances are Henry, $45,000; Luther, $37,000; and Gage, $(5,000). After all assets are sold and liabilities are paid, there is $77,000 in cash to be distributed. Gage is unable to pay the deficiency. The journal entry to record the distribution should be:

Answer and Explanation:

The journal entry to record the distribution is as follows;

But before that following calculations need to be required

Capital, Henry = $45,000

Capital, Luther = $37,000

Capital, Gage = -$5,000

Now there is a deficiency in the gage capital account i.e. $5,000 should be borne by Henry and Luther in equal ratio i.e. $2,500 each  

Now the henry final balance is

= $45,000 - $2,500

= $42,500

And, the luther final balance is

= $37,000 - $2,500

= $34,500

Now the journal entry is  

Henry, capital $42,500  

Luther, capital $34,500  

                  To Cash $77,000

(Being distribution is recorded)

here the capital account is credited as it reduce the stockholder equity and cash is credited as it also reduced the assets

fractionally backed paper money

fiat money

paper money

metallic money