Hillary,Bruce,and Cindy own a partnership firm.Hillary has an ownership interest of $24,000;Bruce has an ownership interest of $41,000;and Cindy has an ownership interest of $30,000.In the process of liquidation,the partnership sells non-cash assets and registers a gain of $30,000.The profit-loss sharing agreement is 1/6 to Hillary;2/6 to Bruce;and 3/6 to Cindy.Which of the following is true when a journal entry for the allocation of gain is recorded?
A)Hillary,Capital is credited for $10,000.
B)Cindy,Capital is credited for $15,000.
C)Hillary,Capital is debited for $10,000.
D)Cindy,Capital is credited for $10,000.

Question

Quizplus · Accepted Answer

B)The partnership has realized a gain of $30,000 which will be allocated to the partner's based on their profit-sharing ratio.Hillary's share will be 1/6 of the $30,000 (5,000),Bruce's share will be 2/6 of the $30,000 ($10,000)and Cindy's share will be 3/6 of the $30,000 ($15,000).The amount of the gain will be credited to each partner's capital account,with Gain on Disposal being debited for the total amount of the gain of $30,000.

Hillary,Bruce,and Cindy Own a Partnership Firm