A partnership began its first year of operations with the following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
The Articles of Partnership stipulated that profits and losses be assigned in the following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis, respectively.
Each partner was allowed to withdraw up to $13,000 per year.
Assume that the net loss for the first year of operations was $26,000 with net income of $52,000 in the second year. Assume further that each partner withdrew the maximum amount from the business each year.
Question 1: What was Young's share of income or loss for the first year?
A) $3,900 loss.
B) $11,700 loss.
C) $10,400 loss.
D) $24,700 loss.
E) $9,100 loss.
Question 2: What was Eaton's share of income or loss for the first year?
A) $3,900 loss.
B) $11,700 loss.
C) $10,400 loss.
D) $24,700 loss.
E) $9,100 loss.
Question 3: What was Thurman's share of income or loss for the first year?
A) $3,900 loss.
B) $11,700 loss.
C) $10,400 loss.
D) $24,700 loss.
E) $9,100 loss.
Question 4: What was the balance in Young's Capital account at the end of the first year?
A) $120,900.
B) $118,300.
C) $126,100.
D) $80,600.
E) $111,500.
Question 5: What was the balance in Eaton's Capital account at the end of the first year?
A) $120,900.
B) $118,300.
C) $126,100.
D) $80,600.
E) $111,500.
Question 6: What was the balance in Thurman's Capital account at the end of the first year?
A) $120,900.
B) $118,300.
C) $126,100.
D) $80,600.
E) $111,500.
Question 7: What was Young's share of income or loss for the second year?
A) $17,160 income.
B) $4,160 income.
C) $19,760 income.
D) $17,290 income.
E) $28,080 income.