Wallace and Simpson Formed a Partnership with Wallace Contributing $60,000

question 50

Multiple Choice

Wallace and Simpson formed a partnership with Wallace contributing $60,000 and Simpson contributing $40,000.Their partnership agreement calls for the income (loss) division to be based on the ratio of capital investments.The partnership had income of $150,000 for its first year of operation.When the Income Summary is closed,the journal entry to allocate partner income is:

• A)Debit Income Summary $150,000;credit Wallace,Capital $75,000;credit Simpson,Capital $75,000.
• B)Debit Wallace,Capital $75,000;debit Simpson,Capital $75,000;credit Income Summary $150,000.
• C)Debit Income Summary $150,000;credit Wallace,Capital $90,000;credit Simpson,Capital $60,000.
• D)Debit Cash $150,000;credit Wallace,Capital $90,000;credit Simpson,Capital $60,000.
• E)Debit Wallace,Capital $90,000;debit Simpson,Capital $60,000;credit Cash $150,000.

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