A Partnership Began Its First Year of Operations with the Following

question 47

Multiple Choice

A partnership began its first year of operations with the following capital balances: 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 and $13,000 salary was to be awarded 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 to Young, Eaton, and Thurman, respectively.Each partner withdrew $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.What was Thurman's total share of net 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.

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Definitions:

Ownership

The legal right or state of having control over something, such as property or a business.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically for the financing of accounts receivable and inventories.

Short-Term Financing

Funding obtained for a period of one year or less, used to cover immediate needs such as working capital requirements.