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26 April, 09:30

Dawn, Garret and Josh have partnership capital account balances of $225000, $450000 and $105000, respectively. The income sharing ratio is Dawn, 50%; Garret, 40%; and Josh, 10%. Dawn desires to withdraw from the partnership and it is agreed that partnership assets of $195000 will be used to pay Dawn for her partnership interest. The balances of Garret's and Josh's Capital accounts after Dawn's withdrawal would be

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  1. 26 April, 12:34
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    Ending capital account balance of Garret = $426,000

    Ending capital account balance of Josh = $99,000

    Explanation:

    For computation of ending capital account balance of Garret's and Josh's Capital accounts after Dawn's withdrawal so in this case we need to find out first Dawn' s withdraw which is shown below:-

    Balance remaining of Dawn = Beginning balance - Payment through assets

    = $225,000 - $195,000

    = $30,000

    Ending capital account balance of Garret = Beginning capital account balance - Remaining balance will be allocated

    = $450,000 - ($30,000 * 4 : 5)

    = $450,000 - $24,000

    = $426,000

    Ending capital account balance of Josh = Beginning capital account balance - Remaining balance will be allocated

    = $105,000 - ($30,000 * 1 : 5)

    = $105,000 - $6,000

    = $99,000
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