The partnership of Crandall, Crandall, and Dixon state that the partners will share profits and losses equally. Prior to liquidation, Dixon has a deficit of $8,000 that he cannot pay. The other partners will absorb the deficiency. The journal entry to record this transaction will include a (debit/credit) to Dixon, Capital in the amount of $.
Solution -
The journal entry to record this transaction will include a Credit to Dixon, Capital in the amount of $8,000.
Explanation -
Dixon is in the deficit of $8,000 and there 3 partners hence the deficit will bear the other 2 partners. It is mentioned in the quesiton that parters sharing profit / losses in the equal ratio.
Hence such deficiency of the one partner will bear the other two partners in the equal ratio.
Journal Entry -
The partnership of Crandall, Crandall, and Dixon state that the partners will share profits and losses...
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