Question

Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital balances are $80,000 and $120,000, respectively. Income Summary has a credit balance of $30,000. What is Tomas's capital balance after closing Income Summary to the capital accounts?

Answer 1

$102,500

Step-by-step explanation:

Credit balance of $30,000 in income summary is PROFIT.

Which will be distributed among Tomas and Saturn in 3:1 ratio.

Tomas will get 3/4 * $30,000 = $22,500 as profit

After closing income summary to capital his capital balance will be

$22,500 + $80,000 = $102,500