Table 12-9 Wally, Willie, and Watson Formed a Partnership Several Years Ago

question 15

Multiple Choice

Table 12-9
Wally, Willie, and Watson formed a partnership several years ago. Wally has decided to withdraw from the partnership. The current capital balances are: Wally, capital, $50,000; Willie, capital, $65,000; and Watson, capital, $100,000. Prior to the withdrawal of Wally, the partners agree to revalue some of the partnership assets. Inventory with a cost of $120,000 has a current market value of $150,000; land with a cost of $50,000 has a current market value of $125,000. Wally, Willie, and Watson share net income and losses in a 3:3:4 ratio. Willie and Watson will share net income in a 3:4 ratio.
-Refer to Table 12-9.Wally withdraws from the partnership and accepts $80,000 cash.Assuming the assets have been properly revalued,the entry to withdraw Wally from the partnership includes a:

• A) debit to Wally, Capital for $80,000
• B) credit to Watson, Capital for $857
• C) debit to Watson, Capital for $857
• D) debit to Willie, Capital for $643

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