Question

Partner 1 and Partner 2 share income equally. During the current year the partnership net income was $40,000. Partner 1 made withdrawals of $12,000 and Partner 2 made withdrawals of $17,000. At the beginning of the year, the capital account balances were: Partner 1 capital, $42,000; Partner 2 capital, $58,000. Partner 2’s capital account balance at the end of the year is what?

Please show work to help me understand the material.

Answer 1

Partner 2’s capital account balance at the end of the year is $ 61,000

Working:

Partner 2 Capital Share At Beginning		$   58,000
Add: Owner`s Investment	$           -
Net Income [40000/2]	$ 20,000	$   20,000
Sub Total		$   78,000
Deduct: Drawings		$ (17,000)
Partner 2 Capital Share At Ending		$   61,000