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Sharing Losses Based on Capital Balances Mariela DeJesus and Natasha Faircloth started
Chapter 27, Problem 27-7(choose chapter or problem)
Sharing Losses Based on Capital Balances
Mariela DeJesus and Natasha Faircloth started the partnership In Shape Fitness. Mariela contributed a capital balance of $35,000. Natasha’s capital contribution totaled $45,000. Their partnership agreement specified sharing net profits and net losses on the basis of their capital balances. The net loss for their first year of operation for In Shape Fitness was $28,500.
Instructions Prepare the journal entry required to divide the net loss between the partners. Use the journal in your working papers to record your entry.
Analyze If Mariela took a $1,500 withdrawal, what was her capital account balance on December 31 after the closing entries were posted?
Questions & Answers
QUESTION:
Sharing Losses Based on Capital Balances
Mariela DeJesus and Natasha Faircloth started the partnership In Shape Fitness. Mariela contributed a capital balance of $35,000. Natasha’s capital contribution totaled $45,000. Their partnership agreement specified sharing net profits and net losses on the basis of their capital balances. The net loss for their first year of operation for In Shape Fitness was $28,500.
Instructions Prepare the journal entry required to divide the net loss between the partners. Use the journal in your working papers to record your entry.
Analyze If Mariela took a $1,500 withdrawal, what was her capital account balance on December 31 after the closing entries were posted?
ANSWER:Step 1 of 3
The profit and loss ratio can be defined as a ratio used to determine the amount of profit or loss provided to each partner who contributed capital. It is calculated based on capital or might be pre-decided.