Question

Franco and Elisa share income equally. During the current year the partnership net income was $40,000. Franco made withdrawals of $12,000 and Elisa made withdrawals of $17,000. At the beginning of the year, the capital account balances were: Franco capital, $40,000; Elisa capital, $58,000. Franco’s capital account balance at the end of the year is

Answer 1

$48,000

Step-by-step explanation:

As Franco and Elisa share income equally, Franco share in net income is $20,000 (50% of $40,000)

The capital account balance of Franco (before withdrawal) would be = $40,000 (capital at beginning of the year) +$20,000 = $60,000

Franco made withdrawal of $12,000, therefore, Franco’s capital account balance at the end of the year will be = $60,000 - $12,000 = $48,000