Simonsen, Paulson, and Richardson Are Partners in a Firm with the Following

question 60

Multiple Choice

Simonsen, Paulson, and Richardson are partners in a firm with the following capital account balances: $$\begin{array} { | l | l | } \hline \text { Simonsen } & \$ 50,000 \\\hline \text { Paulson } & 160,000 \\\hline \text { Richardson } & 100,000 \\\hline\end{array}$$ The profit-and-loss-sharing ratio among Simonsen, Paulson, and Richardson is 1:3:2, in the order given. Paulson is retiring from the partnership on December 31, 2013. Paulson's capital account is settled at book value. Journalize the cash payment to Paulson upon retirement.

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Paulson, Capital } & 160,000 & \\
• \hline \text { Cash } & & 160,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Paulson, Capital } & 160,000 & \\
• \hline \text { Cash } & & 100,000 \\
• \hline \text { Simonsen, Capital } & & 20,000 \\
• \hline \text { Richardson, Capital } & & 40,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Cash } & 160,000 & \\
• \hline \text { Paulson, Capital } & & 160,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Paulson, Capital } & 160,000 & \\
• \hline \text { Simonsen, Capital } & 50,000 & \\
• \hline \text { Richardson, Capital } & 100,000 & \\
• \hline \text { Cash } & & 310,000 \\
• \hline
• \end{array}\]

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