On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was forme

Question

On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when the partners contributed $30,000, $59,000, and $61,000, respectively. Over the next three years, the business reported net income and (loss) as follows:

During this period, each partner withdrew cash of $12,000 per year. Krause invested an additional $6,000 in cash on February 9, 2018.

At the time that the partnership was created, the three partners agreed to allocate all profits and losses according to a specified plan written as follows:

Each partner is entitled to interest computed at the rate of 10 percent per year based on the individual capital balances at the beginning of that year.

Because of prior work experience, Angela is entitled to an annual salary allowance of $12,500 per year and Diaz is entitled to an annual salary allowance of $9,100 per year.

Any remaining profit will be split as follows: Angela, 20 percent; Diaz, 30 percent; and Krause, 50 percent. If a net loss remains after the initial allocations to the partners, the balance will be allocated: Angela, 30 percent; Diaz, 40 percent; and Krause, 30 percent.

Determine the ending capital balance for each partner as of the end of each of these three years. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

Explanation / Answer

STATEMENT OF PARTNER'S CAPITAL Year 2017 2018 2019 Angela Diaz Krause Angela Diaz Krause Angela Diaz Krause Opening balance 30000 59000 61000 47700 83300 90600 61570 101630 115160 Profit/(Loss) 14200 21300 35500 8600 12900 21500 -7800 -10400 -7800 Addition 0 0 0 0 0 6000 0 0 0 Withdrawal -12000 -12000 -12000 -12000 -12000 -12000 -12000 -12000 -12000 Interest 3000 5900 6100 4770 8330 9060 6157 10163 11516 Salary 12500 9100 0 12500 9100 0 12500 9100 0 Closing Balance 47700 83300 90600 61570 101630 115160 60427 98493 106876

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