Gary, Peter, and Chris own a firm as partners. Gary has a capital balance of $22
ID: 2493030 • Letter: G
Question
Gary, Peter, and Chris own a firm as partners. Gary has a capital balance of $22,000; Peter a capital balance of $42,000; and Chris has a capital balance of $32,000. As per the partnership agreement, Gary gets a profit share of 2/9; Peter has 4/9; and Chris has 3/9. Which of the following is true, if Gary withdraws from the partnership by receiving $22,000?
A.Gary, Capital will be debited for $22,000.
B.Cash is debited for $22,000.
C.Peter, Capital and Chris, Capital will be credited for $11,000 each.
D.Peter, Capital will be credited for $22,000.
Explanation / Answer
When a partner withdraws an amount equal to his capital balance, his account in books will be closed by Debiting his capital account and crediting cash account.
Hence, in here Option B is correct, that Gary capital account will be debited for $22,000.
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