John and Brad Have Average Capital Balances of $25,000 and $10,000,respectively.The

question 42

Essay

John and Brad have average capital balances of $25,000 and $10,000,respectively.The partners have agreed to allow $20,000 salary allowances.The partners will share income and losses in a 1:2 ratio.How much will each partner's capital account change if net income is $70,000?

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Definitions:

Cash Dividend

A distribution of earnings made by a company to its stockholders, often in the form of profits.

Stock Split

A corporate action that increases the number of shares by dividing each share, which typically reduces the price per share.

Retained Earnings

The portion of a company's profits that are kept or retained and not paid out as dividends to shareholders, often used for reinvestment in the business.

Legal Capital Approach

Method of preparing Paid-In Capital by listing the legal section first.