Fiona and Jason have capital balances of $40 000 and $80 000 respectively and use the variable capital balances method. If their profit/loss sharing ratios are Fiona 25% and Jason 75%, the balance of Fiona's capital account after a net loss of $50 000 is:
A) $23 333
B) $27 500
C) $10 000
D) $52 500

Question

Quizplus · Accepted Answer

Fiona's share of the net loss is 25% of $50,000, which is $12,500. Subtracting this from her initial capital balance of $40,000 gives her a new balance of $27,500.

Fiona and Jason Have Capital Balances of $40 000 and $80