Fundamentals of Advanced Accounting 5th Edition by Joe Ben Hoyle,Thomas Schaefer,Timothy Doupnik

Exercise 21

On January 1, 2012, the dental partnership of Left, Center, and Right was formed when the partners contributed $20,000, $60,000, and $50,000, respectively. Over the next three years, the business reported net income and (loss) as follows:

During this period, each partner withdrew cash of $10,000 per year. Right invested an additional $12,000 in cash on February 9, 2013.
At the time that the partnership was created, the three partners agreed to allocate all profits and losses according to a specified plan written as follows:
• Each partner is entitled to interest computed at the rate of 12 percent per year based on the individual capital balances at the beginning of that year.
• Because of prior work experience, Left is entitled to an annual salary allowance of $12,000, and Center is credited with $8,000 per year.
• Any remaining profit will be split as follows: Left, 20 percent; Center, 40 percent; and Right, 40 percent. If a loss remains, the balance will be allocated: Left, 30 percent; Center, 50 percent; and Right, 20 percent.
Determine the ending capital balance for each partner as of the end of each of these three years.