David,Chris and John started off a partnership firm on 31 July 2017.They decided to share profits equally,but also inserted a clause in the partnership agreement whereby any loss suffered would be borne in the ratio 4:4:1.For the year ended 31 December 2017,the firm earned a net profit of $41,000.However,for the year ended 31 December 2018,the firm incurred a loss of $61,000.Assuming that John had an initial capital contribution of $43,000 and made no further withdrawals,what is the balance of John's Capital account as of 31 December 2018? (Assume that none of the partners made any further contributions to their capital accounts. )
A)$56,667
B)$43,000
C)$36,111
D)$49,889

Question

Quizplus · Accepted Answer

John's share of the 2017 profit is $13,667 (1/3 of $41,000). His share of the 2018 loss is $6,778 (1/9 of $61,000). Therefore, his capital account balance is $43,000 + $13,667 - $6,778 = $49,889.

David,Chris and John Started Off a Partnership Firm on 31