Simon and Keith Have a Profit and Loss Sharing Agreement

question 37

Multiple Choice

Simon and Keith have a profit and loss sharing agreement where: (1) salaries of $30 000 each are credited, (2) 6% interest is allowed on capital balances (3) the remaining profit or loss is split 75-25, respectively. At the end of the year, before the distribution of profits or losses, capital account balances were $40 000 for Simon and $20 000 for Keith. There was a profit of $50 000 before distributions to the partners. What is Keith's year-end capital account balance assuming capital balances are adjusted to reflect profits and losses?

• A) $47 800
• B) $54 600
• C) $62 200
• D) $82 600

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