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13 November, 03:42

Franco and Jason share income and losses in a 2:1 ratio after allowing for salaries of $15,000 and $30,000. If the partnership suffers a $15,000 loss, by how much would Jason's capital account increase?

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  1. 13 November, 05:28
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    Jason capital account will increase by 25,000

    Franco capital account will increase by 5,000

    Explanation:

    The ratio is 2:1

    Franco ratio is 2 / (1 + 2) = 2/3

    While Jason ratio is 1 / (1 + 2) = 1/3

    Jason's capital account will increase for 30,000 for the salaries

    and then, decrease by 15,000 x 1/3 = 5,000 for the loss

    the total increase would be then, 25,000 dollars

    Fraco's capital account will be:

    15,000 from salaries

    and 15,000 x 2/3 = 10,000 decrease from the loss

    the net increase will be of 5,000
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Home » Business » Franco and Jason share income and losses in a 2:1 ratio after allowing for salaries of $15,000 and $30,000. If the partnership suffers a $15,000 loss, by how much would Jason's capital account increase?
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