Choice "C" is correct. Under the bonus method, any premium paid to the retiring partner is allocated to the remaining partners' accounts, based on the profit and loss ratios of the remaining partners.
Choice "a" is incorrect. Goodwill is not recorded in the bonus method.
Choice "b" is incorrect. Expense is not recognized for the premium paid to a retiring partner. Under the bonus method the remaining partners' account balances will be adjusted.
Choice "d" is incorrect. Under the bonus method, the remaining partners' account balances are adjusted.
