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Question: All withdrawals and investments shall be considered when computing for the weighted average capital balance. – Free Chegg Question Answer

1.) All withdrawals and investments shall be considered when computing for the weighted average capital balance.
True or False

2.) The salary portion of the partnership profit and loss allocation is used to compensate partners for the time and effort expected in the business.
True or False

3.) Provisions of legal services by a lawyer is a valid contribution to a partnership.
True or False

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Answer: True, True

Weighted average Capital balance = Balance after every withdrawal or investment * weights(months)

For example

Jan 1 Balance = 100000

Jul 1 Investment = 50000

Oct 1 Withrawal = 20000

so weighted average capital = (100000*6/12) + (150000*3/12) + (130000*3/12)

= 50000+37500+32500

= 120000

So for weighted average calculation introduction and withdrawal is need to be considered.


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