Partners Brian, Josh, and Chad have capital balances of $11,000, $12,000, and $86,000, respectively. The losses for the year are $14,000. What will Josh's capital balance be if the three partners share profits and losses at a 2:2:6 ratio for Brian, Josh, and Chad, respectively?
A) $9,200 debit balance
B) $8,200 debit balance
C) $2,800 debit balance
D) $9,200 credit balance

Question

Quizplus · Accepted Answer

Josh's capital balance will be $9,200 credit balance after sharing the losses according to the 2:2:6 ratio. The total ratio units are 10 (2+2+6), and Josh's share is 2/10 of the losses. The losses are $14,000, so Josh's share is 2/10 * $14,000 = $2,800. Subtracting this from his original capital of $12,000 gives $12,000 - $2,800 = $9,200 credit balance.

Partners Brian, Josh, and Chad Have Capital Balances of $11,000