Problem: R. Cunningham had been speaking with A. Fonzarelli about selling his portion of a partnership in "Arnold's Good Time Hamburger Haven and Karaoke Extravaganza!" Currently Fonzarelli's Owner's Equity account in "Arnold's" is $397,412. Cunningham has offered him $200,000 for half of his equity, so that Fonzarelli won't be completely out of the hamburger business which he loves so much. C. Arnold, who is Fonzarelli's partner has no problems with Fonzarelli selling half his equity in the company and generally likes Cunningham as long as he doesn't have to deal with him too terribly often. If Fonzarelli agrees to the deal what kind of journal entry would be recorded on the books of "Arnold's Good Time Hamburger Haven and Karaoke Extravaganza?"
Answer
A. A Debit to C. Arnold-Capital for $397,412; A Credit to A. Fonzarelli for $198,706, and a Credit to R. Cunningham for $198,706
B. None of the other answers
C. A Debit to A. Fonzarelli-Capital for $198,706; A Credit to R. Cunningham-Capital for $198,706
D. A Debit to R. Cunningham-Capital for $200,000; and a Credit to A. Fonzarelli-Capital for $200,000
E. A Debit to A. Fonzarelli-Capital for $198,706; A Credit to R. Cunningham-Capital for $200,000 and a Credit for $197,412 for Paid in Capital in Excess of Par