Wright,Bell,and Edison are partners and share income in a 2:5:3 ratio.The partnership's capital balances are as follows: Wright,$33,000,Bell $27,000 and Edison $40,000.Edison decides to withdraw from the partnership,and the partners agree not to revalue the assets upon Edison's retirement.The journal entry to record Edison's June 1 withdrawal from the partnership if Edison sells his interest to Whitney for $45,000 after the other two partners approve Whitney as partner is:
A)Debit Edison,Capital $45,000;credit Whitney,Capital $45,000.
B)Debit Edison,Capital $40,000;credit Cash $40,000.
C)Debit Edison,Capital $40,000;debit Wright,Capital $2,500;debit Bell,Capital $2,500;credit Whitney,Capital $45,000.
D)Debit Edison,Capital $40,000;credit Whitney,Capital $40,000.
E)Debit Edison,Capital $40,000;debit Cash $5,000;credit Whitney,Capital $45,000.

Question

Quizplus · Accepted Answer

Edison's capital account is debited for his balance of $40,000, and Whitney's capital account is credited for the same amount, as Edison sells his interest to Whitney for $45,000, which is a personal transaction and does not affect the partnership's books.

Wright,Bell,and Edison Are Partners and Share Income in a 2:5:3