Question

Paul and Roger are partners who share income in the ratio of 3:2. Their capital balances are $90,000 and $130,000, respectively. The partnership generated net income of $50,000 for the year. What is Roger's capital balance after closing the revenue and expense accounts to the capital accounts?

Answer 1

The rates are applied for the division of capital, obligations, among many other transactions that occur in companies, are based on the participation that each party has per committed monetary unit, that is, if it is debt or growth, how much should each contribution or gain part regarding the amount.

In this case as the rate is 3:2, this means that the total must be divided into 3 + 2 = 5 parts, of which 3 will correspond to Paul and 2 to Roger.

Answer

Roger's capital will increase 2/5 parts of the net capital obtained, that is

$\ 50.000 \times \frac {2}{5}=\ 20.000$

Which added to the balance of capital gives a total of $150.000