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2 November, 04:28

Profits and losses are split as follows: Allen (20%), Burns (30%), and Costello (50%). 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? A. $24,000. B. $36,000. C. $33,000. D. $27,000.

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  1. 2 November, 04:36
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    A. $24,000

    Explanation:

    The missing information is shown below:

    Allen capital $60,000

    Burns capital $30,000

    Costello capital $90,000

    For computing the balance of Burns's capital account, first we have to determine the different amount which is shown below:

    = Paid amount - Costello capital

    = $100,000 - $90,000

    = $10,000

    This bonus amount would be deducted from the remaining partner's balances in the ratio of 3:2

    For Burns, it would be

    = $10,000 * 3 : 5

    = $6,000

    So, the burns capital amount would be

    = $30,000 - $6,000

    = $24,000
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Home » Business » Profits and losses are split as follows: Allen (20%), Burns (30%), and Costello (50%). Costello wants to leave the partnership and is paid $100,000 from the business based on provisions in the articles of partnership.
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