Gemma and Audrey Are in Partnership

Multiple Choice

Gemma and Audrey are in partnership. Their capital balances at the end of the accounting period are $200 000 and $150 000 respectively. Gemma decides to make a permanent cash withdrawal from her capital account of $75 000. Assuming the fixed capital balances method (method 2) is used, the accounting entry to record this transaction is:

A) DR Gemma capital account $75 000; CR Profit distribution account $75 000
B) DR Gemma capital account $75 000; CR Bank account $75 000
C) DR Gemma retained earnings account $75 000; CR Profit distribution account $75 000
D) DR Gemma retained earnings account $75 000; CR Bank account $75 000