Carla and Eliza share income equally. During the current year the partnership net income was $40,000. Carla made withdrawals of $12,000 and Eliza made withdrawals of $17,000. At the beginning of the year, the capital account balances were: Carla capital, $42,000; Eliza capital, $55,000. Eliza's capital account balance at the end of the year is

Question

Quizplus · Accepted Answer

The total withdrawals that Carla and Eliza made during the year were $12,000 + $17,000 = $29,000. Since they share income equally, each partner is entitled to half of the $40,000 net income, or $20,000.

Therefore, at the end of the year, Carla's capital account balance would be:
$42,000 (beginning capital) + $20,000 (her share of net income) - $12,000 (withdrawals) = $50,000.

Similarly, Eliza's capital account balance would be:
$55,000 (beginning capital) + $20,000 (her share of net income) - $17,000 (withdrawals) = $58,000.

So the correct answer is choice B, $58,000.

Carla and Eliza Share Income Equally