Can someone help me with this accounting problem?

College Search & Lists
1

<p>I know the answer because my teacher gave us it but I was hoping someone could show me the steps. Thanks!</p>

<p>Corey and Malinda started a partnership on January 1, 2012. Corey invested $25,000 in the business, and Malinda invested $20,000. The partnership agreement stated that profits would be divided between the partners based on their initial investment in the partnership. The business’s net income for 2012 was $36,000. During the year, Corey withdrew $8,000, and Malinda withdrew $6,000. The balances in the partners’ accounts at the end of 2012 were</p>

<pre><code>A. Corey-$42,000 Malinda- $24,000
B. Corey-$17,000 Malinda- $14,000
C. Corey-$33,500 Malinda- $33,500
D. Corey-$37,000 Malinda- $30,000
</code></pre>

<p>A. Choice A</p>

<p>B. Choice B</p>

<p>C. Choice C</p>

<p>D. Choice D</p>

2

<p>C gets 25/45 of the $36,000, or 20,000. Plus the $25k capital contribution, less the $8k distribution, is $37,000.</p>

<p>M gets 20/45 of the $36,000, or 16,000. Plus the $20k capital contribution, less the $6k distribution, is $30,000.</p>

3

<p>There are a few shortcuts you can take to reduce your math.</p>

<p>Notice that 25/45 reduces to 5/9, and 20/45 reduces to 4/9.</p>

<p>Notice that 36,000 is divisible by 9. So each ninth is equal to 4000.</p>

<p>Five ninths will be 20,000 and four ninths will be 16,000. And 20,000 + 16,000 = 36,000 which is the correct net income.</p>