Bell and C $\$ 102,000$ $\quad$ $\quad$ C Quirk $\$ 18,000$

question 10

Multiple Choice

Bell and C.Quirk started a partnership in 2014.Because Bell contributed a larger amount toward the partnership at inception,the partnership agreement specified the following split of profits and losses in a two-phase allocation.The first allocation would split profits and losses in proportion to the partners' relative capital balances up to 20% of those balances.The remainder would be split evenly.At the end of the first year,the partnership had a net loss of $40,000.Partners' capital balances were as follows: W. Bell: $\$ 102,000$$\quad$$\quad$ C. Quirk: $\$ 18,000$ How much of the net loss was allocated to W.Bell?

• A) ($20,400)
• B) ($28,400)
• C) ($20,000)
• D) ($26,900)

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Definitions:

Retained Earnings

The portion of net income that is not distributed to shareholders and is instead reinvested in the company.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the owners' claim on the company's assets.

Financial Statement

A record that details the financial activities and condition of a business, person, or other entity.

Accounts

Financial records of an entity that detail transactions and can be used to prepare financial statements.