Jemma and Sally Are in Partnership

Multiple Choice

Jemma and Sally are in partnership. Their capital balances at the end of the accounting period are $200 000 and $150 000 respectively. Jemma decides to make a permanent cash withdrawal from her capital account of $50 000. If it is assumed that they use the variable capital balances method (method 1) , which of the following is the accounting entry torecord this transaction?

A) Debit Jemma capital account $50 000; credit profit distribution account $50 000
B) Debit Jemma retained earnings account $50 000; credit profit distribution account $50 000
C) Debit Jemma capital account $50 000; credit bank account $50 000
D) Debit Jemma retained earnings account $50 000; credit bank account $50 000