Answered: P invests $60,000 for one-third…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 1PA: The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after...

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Question

P invests $60,000 for one-third interest in the PQR Partnership. During the period, P's share of the partnership income is $120,000 and P has withdrawn $75,000. The partnership has recourse liabilities of $48,000. Using this information, which of the following is P's capital account balance?

$60,000

$105,000

$120,000

$121,000

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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