David,Chris and John Formed a Partnership on July 31,2019

question 71

Multiple Choice

David,Chris and John formed a partnership on July 31,2019.They decided to share profits equally,but inserted a clause in the partnership agreement where any losses would be allocated in the ratio of 5:2:3,respectively.For the year ended December 31,2019,the firm earned a net income of $50,000.However,for the year ended December 31,2020,the firm incurred a loss of $60,000.Assuming that John had an initial capital contribution of $43,000 and made no withdrawals,what is the balance of John's Capital account as of December 31,2020? (Assume that none of the partners made any further contributions to their capital accounts.Do not round any percentage calculations.Round all monetary calculations to the nearest dollar.)

• A) $41,667
• B) $43,000
• C) $59,667
• D) $44,333

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Definitions:

Total Assets

The sum of all assets owned by a company, including both current and non-current assets.

Accounting Systems

A structured process of collecting, recording, summarizing, and reporting financial transactions for a business or organization.

Common Shares

Equity securities representing ownership interests in a corporation, entitling holders to dividends and certain rights under corporate governance.

Dividends Declared

The announcement by a company's board of directors that a dividend will be paid to the shareholders, which establishes a liability for the company.