Marshall retires from the partnership of Marshall,Mark,and Dennis.Marshall had a capital balance of $25,000.If Marshall received $25,000 as final settlement,how will this transaction affect the balance sheet items?
A) Cash will increase.
B) Liabilities will increase.
C) Liabilities will decrease.
D) Equity will decrease.

Question

Quizplus · Accepted Answer

Marshall received the book value of his capital account (no bonuses). His Capital account will be debited (decrease equity) and Cash will be credited.

Marshall Retires from the Partnership of Marshall,Mark,and Dennis