Question

Prior to the distribution of cash to the partners, the accounts in the Pharoah Company are Cash $34,400; Vogel, Capital (Cr.) $20,600; Utech, Capital (Cr.) $18,600; and Pena, Capital (Dr.) $4,800. The income ratios are 5:3:2, respectively. Pharoah Company decides to liquidate the company. Prepare the entry to record (1) Pena's payment of $4,800 in cash to the partnership and (2) the distribution of cash to the partners with credit balances. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (1) (2) LINK TO TEXT Prepare the entry to record (1) the absorption of Pena's capital deficiency by the other partners and (2) the distribution of cash to the partners with credit balances. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (1)

Answer 1

	Answer
A	Particulars	Cash	Vogel, Capital	Utech, Capital	Pena,     capital
	Balances before liquidation	$       34,400	$            -20,600	$            -18,600	$         4,800
	Pena payment	$         4,800			$        -4,800
	Balance	$       39,200	$            -20,600	$            -18,600	$               -
1	To record the Pena’s payment of $4,000 in cash
	Cash	$         4,800
	Pena, capital		$               4,800
2	To record the distribution of cash to the partners with credit balances
	Vogel, capital	$      -20,600
	Utech, capital	$      -18,600
	Cash		$            -39,200
B	Particulars	Cash	Vogel, Capital	Utech, Capital	Pena,     Capital
	Balances before liquidation	$       34,400	$            -20,600	$            -18,600	$         4,800
	Absorb Pena deficiency		$3,000 (4800×5/8)	$1,800 (4800×3/8)	$        -4,800
	Balance	$       34,400	$            -17,600	$            -16,800	$               -
1	To record the  the absorption of Pena’s capital deficiency by the other partners
	Vogel, Capital	$         3,000
	Utech, Capital	$         1,800
	Pena,     Capital		$               4,800
2	To record the distribution of cash to the partners with credit balances
	Vogel, capital	$       17,600
	Utech, capital	$       16,800
	Cash		$             34,400