The following information is available on TGR Enterprises, a partnership, for the most recent fiscal year: Total partnership capital at beginning of the year $180,000
Partnership net income for the year $150,000
Withdrawals by partners during the year $120,000
Additional investments by partners during the year $ 60,000
There are three partners in TGR Enterprises: Tracey, Gregory and Rodgers. At the end of the year, the partners' capital accounts were in the ratio of 2:1:2, respectively. Compute the ending capital balances of the three partners.
A) Tracey = $108,000; Gregory = $54,000; Rodgers = $108,000.
B) Tracey = $90,000; Gregory = $90,000; Rodgers = $90,000.
C) Tracey = $204,000; Gregory = $102,000; Rodgers = $204,000.
D) Tracey = $84,000; Gregory = $102,000; Rodgers = $84,000.
E) Tracey = $60,000; Gregory = $30,000; Rodgers = $60,000.

Question

Quizplus · Accepted Answer

1. Calculate the total capital at the end of the year:
Beginning capital + Additional investment by partners - Withdrawals = Total capital
$180,000 + $60,000 - $120,000 = $120,000
2. Divide the total capital into the partners' capital ratios, which are 2:1:2:
2x + 1x + 2x = 5x
Tracey's capital = 2/5 x $120,000 = $48,000
Gregory's capital = 1/5 x $120,000 = $24,000
Rodgers's capital = 2/5 x $120,000 = $48,000
3. Add the net income to each partner's capital and subtract each partner's withdrawals:
Tracey's capital = $48,000 + $75,000 - $60,000 = $63,000
Gregory's capital = $24,000 + $37,500 - $30,000 = $31,500
Rodgers's capital = $48,000 + $37,500 - $30,000 = $55,500
Therefore, the ending capital balances of the three partners are Tracey = $108,000; Gregory = $54,000; Rodgers = $108,000.

The Following Information Is Available on TGR Enterprises, a Partnership