Question

Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital balances are $40,000 and $60,000, respectively. The partnership generated net income of $20,000. What is Saturn's capital balance after closing the revenue and expense accounts to the capital accounts

Answer 1

capital balance of Saturn: 65,000

Step-by-step explanation:

Saturn participation in the net income:

1:3 >> 1 / 4 = 25%

capital balance of Saturn 60,000

net income : 20,000 x 25% = 5,000

capital balance of 65,000

We simply add up the percentage of participation in the win/losses to Saturn capital account