Asked by Jagmeet Sahota on Jul 25, 2024
Verified
Carrie withdrew from the partnership of Carrie, Carl, and Van, and accepted $18,000 cash. Her capital balance was $23,400 and the difference will be shared in a ratio of 2:1 for Carl and Van, respectively. The entry would be to:
A) debit Cash $18,000; credit Van, Capital $18,000.
B) debit Van, Capital $23,400; credit Cash $23,400.
C) debit Carrie, Capital $23,400; credit Cash $18,000; credit Carl, Capital $3,600; credit Van, Capital $1,800.
D) debit Cash $23,400; debit Van, Capital $3,600; debit Carl, Capital $1,800; credit Carrie, Capital $28,800.
Capital Balance
The capital balance in a company's equity section represents the owner's investment, adjusted for withdrawals and profits or losses.
Withdraws
Money taken out from a business by its owners for personal use.
- Comprehend the principles behind variations in partnership equity due to transactions.
Verified Answer
SE
Shanel EllisJul 28, 2024
Final Answer :
C
Explanation :
The correct entry removes Carrie's capital balance of $23,400, pays her $18,000 in cash, and distributes the remaining $5,400 difference to Carl and Van in a 2:1 ratio, resulting in $3,600 for Carl and $1,800 for Van.
Learning Objectives
- Comprehend the principles behind variations in partnership equity due to transactions.