1. The Partners' Capital Statement for DSB Company reported the following information in total:

Capital, January 1	$241000
Additional investment	80200
Drawings	161000
Net income	197000

2. The partners share income in the ratio of their beginning of year capital balances and each partner withdrew the same amount during the period. The partnership has three partners: Davis, Sauls, and Birch with ending capital balances in a ratio 40:20:40. What are the respective ending balances of the three partners?

1. Davis, $175200; Sauls, $87600; Birch, $175200.
2. Davis, $142880: Sauls, $71440; Birch, $142880.
3. Davis, $160800; Sauls, $80400; Birch, $160800.
4. Davis, $271680; Sauls, $135840; Birch, $271680.

3. Donald and Devito share partnership profits and losses in the ratio of 6:4. Donalds Capital account balance is $155000 and Devitos Capital account balance is $108000. Nance is admitted to the partnership by investing $180000 and is to receive a one-fourth ownership interest. Donald, Devito and Nances capital balances after Nances investment will be

Donald				Devito				Nance
A $155000		$108000				$180000

B $198000		$127300		$110750
C $196550		$135700		$110750

D $195000		$130300		$110750

4. On November 30, capital balances are James $710000, Lagassi $590000 and Kelly $590000. The income ratios are 20%, 20% and 60% respectively. James decides to retire from the partnership. In order for Lagassi and Kelly to have equal capital interests after the retirement of James, how much partnership cash would have to be paid to James for her partnership interest?

1. $710000.
2. $630000.
3. Any amount paid to James will cause Lagassi and Kelly to still have equal capital balances.
4. $0.

5. In the liquidation process, if a capital account shows a deficiency :

1. it may be written off to a "Loss" account.
2. it is disregarded until after the partnership books are closed.
3. the partner with a deficiency has an obligation to the partnership for the amount of the deficiency.
4. it can be written off to a "Gain" account.