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Rex and Kelsey are partners who share income in the ratio of 3:2. Their capital balances are $95,000 and $140,000, respectively. Income Summary has a credit balance of $40,000 after the second closing entry. What is Rex's capital balance after closing Income Summary to the capital accounts? a.$71,000 b.$119,000 c.$146,000 d.$111,000

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Answer:

Option B

Closing balance = $119,000

Explanation:

The closing entries in the partners' capital account would be the sum of the opening balance in their capital accounts and their share of profit.

The capital account of Rex after the closing the income would be :

                                                              $

Opening balance                                95,000

Share of profit (3/5× 40,000)             24,000

Closing balance                                   119,000

Closing balance = $119,000