Question

Assume that there are three partners in a partnership, A, B, and C. Partners A and...

Assume that there are three partners in a partnership, A, B, and C. Partners A and B each began
the year with a capital account of $900,000. Partner C was admitted to the partnership during the
year with a capital contribution of $630,000. The Partnership Agreement provides for a salary to
Partner C of $90,000 and interest on the respective Capital Accounts of
$45,000/$45,000/$23,625, respectively. During the year, the partners withdrew
$36,000/$36,000/$21,000 and the allocation of profit was $207,900/$207,900/$121,275,
respectively

Prepare the Statement of Partners’ Capital for the year. Please provide explanation for each calculation

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Answer #1
All Amounts in $
A B C Total
Statement of Partners' Capital
Capital account, beginning of year 900000 900000 1800000
Capital contributions 630000 630000
Withdrawals -36000 -36000 -21000 93000
Salary 90000 90000
Interest 45000 45000 23625 123625
Allocation of remaining profit 207900 207900 121275 537075
Closing Balance in Capital Account 1116900 1116900 843900 3077700
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