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The partnership of Crandall, Crandall, and Dixon state that the partners will share profits and losses...

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 $.

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Answer #1

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 -

Journal Entries Date Accounts Title Debit Credit 1 Crandall, Capital $ 4,000 Crandall, Capital $ 4,000 Dixon, Capital $ 8,000

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