Liquidation—Capital balance computation correcting an error
The profit and loss sharing agreement of the partnership of Ali, Bart, and Carrie provides a salary allowance for Ali and Carrie of $10,000 each. Partners receive a 10 percent interest allowance on their average capital balances for the year. The remainder is divided 40 percent to Ali, 20 percent to Bart, and 40 percent to Carrie. The December 31, 2011, after closing balances are as follows:
|
Net assets |
$150,000 |
Ali capital |
$ 60,000 |
|
Bart capital |
25,000 |
||
|
Carrie capital |
65,000 |
||
|
$150,000 |
erroneously undervalued by $15,000, resulting in an error in calculating the 2011 net income.
REQUIRED: Determine the correct capital balances of Ali, Bart, and Carrie.