Question

Teri, Doug, and Brian are partners with capital balances of $35,600, $24,100, and $55,800, respectively. They share income and losses in the ratio of 3:2:1. Revenue accounts for the period total $293,400. Expense accounts for the period total $327,000. The revenue and expense accounts are closed to the capital accounts. Doug withdraws from the partnership. How much cash does he receive upon withdrawal?

Teri, Doug, and Brian are partners with capital balances of $35,600, $24,100, and $55,800, respectively. They share income and losses in the ratio of 3:2:1. Revenue accounts for the period total $293,400. Expense accounts for the period total $327,000. The revenue and expense accounts are closed to the capital accounts. Doug withdraws from the partnership. How much cash does he receive upon withdrawal?

a.$12,900

b.$49,700

c.$24,100

d.$33,600

Answer 1

Option A is correct ie $ 12,900

Cash being received by the Doug

Capital Balance    $ 24,100

(-) Share of Loss (WN) ($ 11,200)

Amount of Cash to be rec. by Doug $ 12,900   

Working:

Total Revenue for the period    = $ 2,93,400

(-) Total Expenses for the period    = ($ 3,27,000)   

Total Income / (Loss) =    ($ 33,600)

Profit Sharing Ratio = 3:2:1

So, therefore Share of loss of Doug = $ 33,600 * 2/6 = $ 11,200

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