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

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.
A) $544,000.
B) $416,000.
C) $402,000.
D) $466,000.
E) $388,000.

Question

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

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.
A) $544,000.
B) $416,000.
C) $402,000.
D) $466,000.
E) $388,000.

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 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