Indiana University of Pennsylvania
Department of Accounting
ACCT 401/501: Advanced Accounting
Sample Quiz for Chapter 15
Circle the best choice.
Use the following information for questions 1, 2 and 3.
Willis and Rite share profits and losses equally. Willis and Rite receive salary allowances of
$20,000 and $30,000, respectively, and both partners receive 10% interest on their average
capital balances. Average capital balances are calculated at the beginning of each month
balance regardless of when additional capital contributions or permanent withdrawals are
made subsequently within the month. Partners’ drawings are not used in determining the
average capital balances. Total net income for 2017 is $120,000.
January 1 capital balances
Yearly drawings ($1,500 a month)
Permanent withdrawals of capital:
Additional investments of capital:
What is the weighted-average capital for Willis and Rite in 2017?
$100,000 and $120,000
$105,333 and $126,667
$110,667 and $119,583
$126,667 and $105,333
If the average capital for Willis and Rite from question 1 is $112,000 and $119,000,
respectively, what will be the total amount of profit allocated after the salary and
interest distributions are completed?