**Partnership Capital Account Balances and Journal Entries**Susan, Preston, and Roman are partners in a firm, with the following capital account balances:- Susan: $144,000- Preston: $280,000- Roman: $228,000Preston is retiring from the partnership on December 31, 2024. The profit-and-loss-sharing ratio among Susan, Preston, and Roman is 1:2:3, respectively. Preston is paid $190,000 in cash as full compensation for his capital account balance. Which of the following journal entries would the firm record for this transaction?**Options for Journal Entries:**1. **Option 1:** - Cash: $280,000 (Debit) - Preston, Capital: $280,000 (Credit)2. **Option 2:** - Preston, Capital: $190,000 (Debit) - Cash: $190,000 (Credit)3. **Option 3:** - Preston Capital: $280,000 (Debit) - Cash: $190,000 (Credit) - Susan, Capital: $45,000 (Credit) - Roman, Capital: $45,000 (Credit)4. **Option 4:** - Preston, Capital: $280,000 (Debit) - Cash: $190,000 (Credit) - Susan, Capital: $22,500 (Credit) - Roman, Capital: $67,500 (Credit)This scenario involves determining the correct journal entry to record the retirement of a partner and properly allocate the transaction based on the profit-and-loss-sharing ratio.

Susan, Preston, and Roman are partners in a firm with the following capital account balances: Susan $144,000 280,000 Preston Roman 228,000 Preston is retiring from the partnership on December 31, 2024. The profit-and-loss-sharing ratio among Susan, Preston, and Roman is 1:2:3, respectively. Preston is paid $190,000 cash in full compensation for his cap account balance. Which of the following journal entries would the firm record for this transaction? O Cash 280,000 280,000 Preston, Capital O Preston, Capital Cash O Preston Capital Cash Susan, Capital Roman, Capital O Preston, Capital Cash Susan, Capital Roman, Capital 190,000 280,000 280,000 190,000 190.000 45.000 45,000 190,000 22,500 67,500

Susan, Preston, and Roman are partners in a firm with the following capital account balances: Susan $144,000 280,000 Preston Roman 228,000 Preston is retiring from the partnership on December 31, 2024. The profit-and-loss-sharing ratio among Susan, Preston, and Roman is 1:2:3, respectively. Preston is paid $190,000 cash in full compensation for his cap account balance. Which of the following journal entries would the firm record for this transaction? O Cash 280,000 280,000 Preston, Capital O Preston, Capital Cash O Preston Capital Cash Susan, Capital Roman, Capital O Preston, Capital Cash Susan, Capital Roman, Capital 190,000 280,000 280,000 190,000 190.000 45.000 45,000 190,000 22,500 67,500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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