REFERENCE: Ref.14_02 a Partnership Began Its First Year of Operations with the with the Following

question 79

Multiple Choice

REFERENCE: Ref.14_02
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 salary 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.
-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.

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Definitions:

Excess Fees

Charges that exceed what is deemed reasonable or customary for services or transactions, often subject to scrutiny in financial and legal contexts.

Loan Guarantor

A person or entity that agrees to be responsible for repaying a loan if the primary borrower fails to do so.

Real Estate Deals

Transactions or agreements involving the purchase, sale, or lease of land and the buildings on it.

Business Ventures

Entrepreneurial endeavors or commercial enterprises typically initiated for profit and growth purposes.