Q.2The beginning capital balances in the partnership of A, B and C are 300,000, 500,000 and 700,000 respectively. The partnership agreement contains the following provisions for the division of net income:

1. Partners are allowed 15% interest on their beginning capital balances.

2. B and C each have salary allowances of 120,000.

3. A will be paid commission @ 3% of net income.

4. The drawings made by each partners were A = 30,000, B = 50,000 and C = 70,000. The partners had decided to charge same percentage of interest on drawings as allowed for interest on capitals.

5. Remaining profits and losses are shared among the three partners equally.

Required: Determine the appropriate division of net loss of $ 400,000 among the partners and prepare the capital accounts of all the partners.