During the current year,Chris,Casey,and Steve,who are partners in the CCS Company,had average capital balances of $39,000,$43,000,and $55,000,respectively.The partners share profits and losses by allowing a 12% return on average capital,with any remaining income or loss divided in a ratio of 7:5:3.If the company's income was $8,940,Casey's capital account would:

Question

Quizplus · Accepted Answer

First, we need to find the total amount of income allocated based on the 12% return on average capital. 
Chris: $39,000 x 12% = $4,680
Casey: $43,000 x 12% = $5,160
Steve: $55,000 x 12% = $6,600
Total: $16,440

Next, we need to allocate the remaining income based on the 7:5:3 ratio. 
Total allocated for ratio: $8,940 - $16,440 = $-7,500 (negative because there is a loss)
7 parts = -3,150 
5 parts = -2,250 
3 parts = -1,350

Now, we need to add up each partner's share of the income/loss. 
Chris: $4,680 - $3,150 = $1,530 
Casey: $5,160 - $2,250 = $2,910 
Steve: $6,600 - $1,350 = $5,250

Finally, we add each partner's share of the income/loss to their average capital balance to get their ending capital balance. 
Chris: $39,000 + $1,530 = $40,530 
Casey: $43,000 + $2,910 = $45,910 
Steve: $55,000 + $5,250 = $60,250

Therefore, Casey's capital account would increase by $2,660 (Choice C)

During the Current Year,Chris,Casey,and Steve,who Are Partners in the CCS