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

question 10

Multiple Choice

Simonsen,Paulson and Richardson are partners in a firm with the following capital account balances:
$$\begin{array} { | l | l | } \hline \text { Simonsen } & \$ 50,000 \\\hline \text { Paulson } & 150,000 \\\hline \text { Richardson } &80,000 \\\hline\end{array}$$
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 31 December 2017.Paulson's capital account is settled at book value.Journalise the cash payment to Paulson upon retirement.

• A) \[\begin{array} { | c | l | l | } \hline \text { Paulson, capital } & \$ 150,000 & \\ \hline \text { Cash } & & 90,000 \\ \hline \text { Simonsen, capital } & & 20,000 \\ \hline \begin{array} { c } \text { Richardson, } \\ \text { capital } \end{array} & & 40,000 \\ \hline \end{array}\]

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Definitions:

Firm Commitment

A guarantee given by an underwriter to purchase all the unsold shares in an initial public offering or a secondary offering.

Financial Responsibility

The ability to manage one's financial resources wisely, including saving, investing, and spending in a manner that ensures long-term financial stability.

Syndicate Buys

Refers to a group of investors or underwriters pooling together to buy the entire or a large portion of a new securities issue for resale.

Dutch Auction

A method of public offering in which the price of the offering is set after taking in all bids and determining the highest price at which the total offering can be sold.