Kessington Company wishes to liquidate the firm by distributing the company”s cash to the three partners. Prior to the distribution of cash, the company”s balances are Cash $45,000; Rollings, Capital (Cr.) $28,000; Havens, Capital (Dr.) $12,000; and Ostergard, Capital (Cr.) $29,000. The income ratios of the three partners are 4:4:2, respectively. Prepare the entry to record the absorption of Havens’ capital deficiency by the other partners and the distribution of cash to the partners with credit balances.
Allocate any unpaid capital deficiency to the partners with credit balances, based on their income ratios.
After distribution of the deficiency, distribute cash to the remaining partners, based on their capital balances.
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