Note: This Is a Kaplan CPA Review Question

question 41

Multiple Choice

Note: This is a Kaplan CPA Review Question
On June 30, the balance sheet for the partnership of Williams, Brown and Lowe, together with their respective profit and loss ratios, was as follows:
Williams has decided to retire from the partnership and by mutual agreement the assets are to be adjusted to their fair value of $360,000 at June 30. It was agreed that the partnership would pay Williams $102,000 cash for his partnership interest exclusive of his loan which is to be repaid in full. No goodwill is to be recorded in this transaction. After William's retirement, and before the loan is repaid, what are the capital account balances of Brown and Lowe, respectively?

• A) $65,000 and $150,000
• B) $72,000 and $171,000
• C) $73,000 and $174,000
• D) $77,000 and $186,000

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Definitions:

Light Adaptation

The process by which the eye adjusts to bright light conditions after being in darker settings.

Squint

A condition where the eyes do not properly align with each other when looking at an object, leading to uncoordinated eye movements.

Opponent Process Theory

A theory of color vision and visual processing that proposes color perception is controlled by the activity of two opponent systems: a blue-yellow mechanism and a red-green mechanism.

Afterimage

A visual phenomenon where an image continues to appear in one's vision after the exposure to the original image has ended.