During the current year,Lisa,Tony,and Brian,who are partners in the Corsetti Company,had average capital balances of $41,000,$53,000,and $48,000,respectively.The partners share profits and losses by allowing a $16,000 salary to Lisa and a $14,000 salary to Brian,and a 12% return on average capital balances to all the partners.Any remaining income or loss is divided equally.If the company's income was $101,040,Brian's capital account would increase by:

Question

Quizplus · Accepted Answer

First, we need to calculate the total salary expense for Lisa and Brian:
Lisa's salary = $16,000
Brian's salary = $14,000
Total salary expense = $30,000

Next, we need to calculate the total return on average capital balances for all partners:
Total average capital balance = $41,000 + $53,000 + $48,000 = $142,000
Return on average capital balances (12%) = $142,000 x 0.12 = $17,040

Now, we can calculate the total amount to be allocated to the partners:
Total income - total salary expense - total return on average capital balances = $101,040 - $30,000 - $17,040 = $54,000

This $54,000 will be divided equally among the three partners:
Amount to be allocated to each partner = $54,000 / 3 = $18,000

Finally, we can calculate the increase in Brian's capital account:
Brian's share of the total allocation = $18,000
Brian's share of the return on his average capital balance = $48,000 x 0.12 = $5,760
Total increase in Brian's capital account = $18,000 + $5,760 = $23,760

However, we need to remember that Brian's capital account already had an average balance of $48,000, so the final increase would be:
Final increase in Brian's capital account = $48,000 + $23,760 = $71,760
Brian's capital account would increase by $23,760. Therefore, the correct answer is C) $37,760.

During the Current Year,Lisa,Tony,and Brian,who Are Partners in the Corsetti