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Question: On January 1, 2020, the dental partnership


On January 1, 2020, the dental partnership of Angela, Diaz, and Krause was formed when the partners contributed $30,000, $58,000, and $60,000, respectively. Over the next three years, the business reported net income and (loss) as follows:



On January 1, 2020, the dental partnership of Angela, -1

During this period, each partner withdrew cash of $15,000 per year. Krause invested an additional $5,000 in cash on February 9, 2021.
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 10 percent per year based on the individual capital balances at the beginning of that year.
∙ Because of prior work experience, Angela is entitled to an annual salary allowance of $12,000 per year, and Diaz is entitled to an annual salary allowance of $9,000 per year.
∙ Any remaining profit will be split as follows: Angela, 20 percent; Diaz, 40 percent; and Krause, 40 percent. If a net loss remains after the initial allocations to the partners, the balance will be allocated: Angela, 30 percent; Diaz, 50 percent; and Krause, 20 percent.
Prepare a schedule that determines the ending capital balance for each partner as of the end of each of these three years.

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