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.What amount of cash will Gage receive upon liquidation?
A)$25,667.
B)$20,667.
C)$30,667.
D)Gage will be invoiced for $5,000.
E)$0.

Question

Quizplus · Accepted Answer

Gage has a negative ending capital account balance, indicating that he owes money to the partnership. This means that he will not receive any cash upon liquidation and will instead need to pay the $5,000 deficiency to the partnership.

Henry,Luther,and Gage Are Dissolving Their Partnership