Table 12-2
Tic, Tac, and Toe have year-end capital balances, before closing entries, of $202,000, $182,000, and $116,000, respectively. They have agreed to share profits and losses in the ratio of their capital balances.
-Refer to Table 12-2.Assuming the company earns a profit of $146,500,the balance of Tac's capital account after closing out the income summary account is:

Question

Quizplus · Accepted Answer

Tac's share of the profit is calculated based on the ratio of his capital balance to the total capital balance. Tac's capital balance is $182,000, and the total capital balance is $500,000 ($202,000 + $182,000 + $116,000). Tac's share of the profit is ($182,000 / $500,000) * $146,500 = $53,326. Adding this to Tac's original capital balance gives $182,000 + $53,326 = $235,326.

Table 12-2 Tic, Tac, and Toe Have Year-End Capital Balances, Before Closing