The following information is available on PDC Enterprises, a partnership, for the most recent fiscal year: Total partnership capital at beginning of the year $1,080,000
Partnership net income for the year $1,250,000
Withdrawals by partners during the year $320,000
Additional investments by partners during the year $ 70,000
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.
A) $466,000.
B) $402,000.
C) $416,000.
D) $544,000.
E) $388,000.

Question

Quizplus · Accepted Answer

First, we need to calculate the total capital contributions by adding the beginning capital and additional investments: 
$1,080,000 + $70,000 = $1,150,000 
Next, we need to calculate the total withdrawals: 
$320,000 
We can now calculate the total ending capital by adding the beginning capital, net income, and additional investments, and subtracting withdrawals: 
$1,080,000 + $1,250,000 + $70,000 - $320,000 = $2,080,000 
We can then set up an equation to represent the capital balances at the end of the year based on the given ratio: 
2x + 2x + 1x = $2,080,000 
Simplifying the equation: 
5x = $2,080,000 
x = $416,000 
Therefore, Cathay's ending capital balance is: 
1x = $416,000.

The Following Information Is Available on PDC Enterprises, a Partnership