Question

Patty and paul are partners who share income in the ratio of 3:2. their capital balances are $90,000 and $130,000, respectively, on january 1. the partnership generated net income of $40,000 for the year. what is paul's capital balance after closing the revenue and expense accounts to the capital accounts?

Answer 1

Since the partnership is 3:2, you need to take the new income and distribute it according to the ratio.

40,000 (there are five total parts or 8,000) and Patty gets 3 (24,000) and Paul gets 2 (16,000).

With Paul's previous balance (130,000) he would have 146,000.