Red,White,and Blue have capital balances immediately after closing entries of $80,000,$100,000,and $135,000,respectively.They have agreed to share all profits equally.Blue is selling his interest to Black for $140,000 cash.The entry on the accounting records of the partnership to record this event includes a:

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DWhen a partner sells their interest to someone outside the partnership, the partnership's accounting records reflect the new partner's capital account. The correct entries are to credit Black's Capital account for the amount he paid to acquire the interest ($140,000, option D) and to remove Blue's capital account balance, which would be indirectly affected through the transaction outside the partnership's books. Option C is incorrect because it suggests crediting Black's Capital account for $135,000, which is Blue's capital account balance before the sale, not the amount Black paid.

Red,White,and Blue Have Capital Balances Immediately After Closing Entries of $80,000,$100,000,and