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

question 46

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

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Definitions:

Subliminal Perception

The processing of information by the brain that occurs below the level of conscious awareness.

Absolute Threshold

The minimum intensity of stimulation that must occur before you experience a sensation.

Exposed Stimuli

Stimuli that are presented to an individual in a way that they can be perceived and processed by the senses.

Sense of Smell

The ability to perceive odors or scents through the olfactory system, which is part of the sensory system.