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

question 23

Multiple Choice

Simonsen,Paulson,and Richardson are partners in a firm with the following capital account balances: $$\begin{array} { | l | r | } \hline \text { Simonsen } & \$ 60,000 \\\hline \text { Paulson } & 170,000 \\\hline \text { Richardson } & 90,000 \\\hline\end{array}$$ 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 31,2018.Paulson's capital account is settled at book value.Which of the following journal entries would the firm record for Paulson's withdrawal?

• A) \[\begin{array} { | c | r | l | }
• \hline \text { Paulson, Capital } & 170,000 & \\
• \hline \text { Cash } & & 170,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Paulson, Capital } & 170,000 & \\
• \hline \text { Cash } & & 110,000 \\
• \hline \text { Simonsen, Capital } & & 20,000 \\
• \hline \text { Richardson, Capital } & & 40,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | l | }
• \hline \text { Cash } & 170,000 & \\
• \hline \text { Paulson, Capital } & & 170,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Paulson, Capital } & 170,000 & \\
• \hline \text { Simonsen, Capital } & 60,000 & \\
• \hline \text { Richardson, Capital } & 90,000 & \\
• \hline \text { Cash } & & 320,000 \\
• \hline
• \end{array}\]

---

Definitions:

Agony and Ecstasy

A phrase capturing the wide range of experiences, from extreme pain or suffering (agony) to intense joy or pleasure (ecstasy).

Collectivist Culture

A culture that emphasizes the needs and goals of the group as a whole over the needs and desires of each individual.

Individualist Culture

Individualist culture emphasizes personal achievements and independence, valuing individual rights above those of the group.

Self-serving Bias

A cognitive bias that involves attributing successes to internal factors and failures to external factors to maintain self-esteem.