The following information is available on PDC Enterprises, a partnership, for the most recent fiscal year: $$\begin{array} { l r }
\text { Total partnership capital at beginning of the year } & \$ 1,080,000 \
\text { Partnership net income for the year } & \$ 1,250,000 \
\text { Withdrawals by partners during the year } & \$ 320,000 \
\text { Additional investments by partners during the year } & \$ 70,000
\end{array}$$ 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.

Question

The following information is available on PDC Enterprises, a partnership, for the most recent fiscal year: $$\begin{array} { l r } 
\text { Total partnership capital at beginning of the year } & \$ 1,080,000 \
\text { Partnership net income for the year } & \$ 1,250,000 \
\text { Withdrawals by partners during the year } & \$ 320,000 \
\text { Additional investments by partners during the year } & \$ 70,000
\end{array}$$ 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.

Quizplus · Accepted Answer

The ending capital is calculated as: Beginning capital + Net income - Withdrawals + Additional investments. Total ending capital = $1,080,000 + $1,250,000 - $320,000 + $70,000 = $2,080,000. The ratio of the partners' capital accounts is 2:2:1, so Cathay's share is 1/5 of the total, which is $2,080,000 * (1/5) = $416,000.

The Following Information Is Available on PDC Enterprises, a Partnership