1- Tomas and Saturn are partners who share income in the ratio of 3:1. Their cap

Question

1- Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital balances are $80,000 and $120,000, respectively. The partnership generated net income of $30,000. What is Saturn's capital balance after closing the revenue and expense accounts to the capital accounts?

a. $127,500

b. $112,500

c. $102,500

d. $120,000

2- Franco and Jason share income and losses in a 2:1 ratio after allowing for salaries of $17,400 and $42,900, respectively. If the partnership suffers a $15,900 loss, by how much would Jason's capital account increase?

a. $17,500

b. $31,800

c. $37,600

d. $42,900

Explanation / Answer

1) Distribution of income :

Tomas = 30000*3/4 = 22500

Saturn = 30000*1/4 = 7500

Saturn capital balance after closing revenue and expense account = 120000+7500 = 127500

so answer is a) 127500

2) Distribution of income :

Total loss = 15900+17400+42900 = 76200

Jason's capital increase = 42900-(76200*1/3) = 17500

so answer is a) 17500

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