A summary balance sheet for the Uma, Van, and Walter partnership on December 31, 2014 is shown below. Partners Uma, Van, and Walter allocate profit and loss in their respective ratios of 4:5:7. The partnership agreed to pay Walter $227,500 for his partnership interest upon his retirement from the partnership on January 1, 2015. Any payments exceeding Walter's capital balance are treated as a bonus from partners Uma and Van.

Assets

Cash $ 75,000

Marketable securities 60,000

Inventory 87,500

Land 90,000

Building-net 150,000

Total assets $462,500

Equities

Uma, capital $212,500

Van, capital 112,500

Walter, capital 137,500

Total equities $462,500

Required: Prepare the journal entry to reflect Walter's retirement. What is the debit to Walter's account?

A.

40,000

B.

137,500

C.

50,000

D.

227,500

Please show work