The following information is available on PDC Enterprises,a partnership,for the most recent fiscal year: There are three partners in TGR Enterprises: Pearson,Darling and Cathay.At the end of the year,the partners' capital accounts were in the ratio of 2:2:1,respectively.Compute the ending capital balances of Cathay.
A)$466,000.
B)$402,000.
C)$416,000.
D)$544,000.
E)$388,000.

Question

The following information is available on PDC Enterprises,a partnership,for the most recent fiscal year:  There are three partners in TGR Enterprises: Pearson,Darling and Cathay.At the end of the year,the partners' capital accounts were in the ratio of 2:2:1,respectively.Compute the ending capital balances of Cathay.
A)$466,000. 
B)$402,000. 
C)$416,000. 
D)$544,000. 
E)$388,000.

Quizplus · Accepted Answer

To find the ending capital balance of Cathay, we need to first determine the total ending capital of the partnership. We can do this by adding up the ending capital balances of all three partners:

Total ending capital = Pearson's capital + Darling's capital + Cathay's capital
Total ending capital = (2x + 2x + 1x) = 5x

We are given that the partnership's total ending capital for the year was $1,200,000, so we can set up the equation:

5x = $1,200,000

Solving for x, we get x = $240,000.

Therefore, Cathay's ending capital balance would be 1x, or $240,000.

Multiplying Cathay's ending capital balance by 2, we get Pearson's ending capital balance: 2x = $480,000.
Multiplying Cathay's ending capital balance by 2, we get Darling's ending capital balance: 2x = $480,000.

Therefore, the ending capital balances of the three partners are: 
- Pearson: $480,000
- Darling: $480,000
- Cathay: $240,000

Thus, the correct answer is C) $416,000.

The Following Information Is Available on PDC Enterprises,a Partnership,for the Most