Question

Tucker and titus are partners who share income in the ratio of 3:1. their capital balances are $40,000 and $60,000, respectively. income summary has a credit balance of $40,000 after the second closing entry. what is tuckers capital balance after closing income summary to the capital accounts?

Answer 1

A ratio of 3:1 means that for a $4 profit for example, $3 goes to Tucker while only $1 goes to Titus. This means that Tucker gets ¾ of the profit. Now for the credit balance of $40,000, ¾ of that goes to Tucker. That is equivalent to $30,000 going to Tuckers pocket.

Therefore, Tuckers capital balance after the closing is:

Tucker = $40,000 + $30,000 = $70, 000