A partnership has the following capital balances: Allen, Capital . . . . . . . . . . . . . $60,000Burns, Capital . . . . . . . . . . . . . 30,000Costello, Capital . . . . . . . . . .. . 90,000 Profits and losses are split as follows: Allen (20 percent), Burns (30 percent), and Costello (50 percent). Costello wants to leave the partnership and is paid $100,000 from the business based on provisions in the articles of partnership. If the partnership uses the bonus method, what is the balance of Burns’s capital account after Costello withdraws? Choose the correct.a. $24,000b. $27,000c. $33,000d. $36,000
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
A partnership has the following capital balances:
Allen, Capital . . . . . . . . . . . . . $60,000
Burns, Capital . . . . . . . . . . . . . 30,000
Costello, Capital . . . . . . . . . .. . 90,000
a. $24,000
b. $27,000
c. $33,000
d. $36,000
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