Wallace and Simpson Formed a Partnership with Wallace Contributing $60,000

Multiple Choice

Wallace and Simpson formed a partnership with Wallace contributing $60,000 and Simpson contributing $40,000. Their partnership agreement calls for the income (loss) division to be based on the ratio of capital investments. The partnership had income of $150,000 for its first year of operation. When the Income Summary is closed, the journal entry to allocate partner income is:

A) Debit Wallace, Capital $90,000; debit Simpson, Capital $60,000; credit Cash $150,000.
B) Debit Cash $150,000; credit Wallace, Capital $90,000; credit Simpson, Capital $60,000.
C) Debit Income Summary $150,000; credit Wallace, Capital $90,000; credit Simpson, Capital $60,000.
D) Debit Wallace, Capital $75,000; debit Simpson, Capital $75,000; credit Income Summary $150,000.
E) Debit Income Summary $150,000; credit Wallace, Capital $75,000; credit Simpson, Capital $75,000.