A Partnership Began Its First Year of Operations with the Following

question 22

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 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 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 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.

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Definitions:

Major Depression Disorder

A mental disorder characterized by a persistent and intense feeling of sadness or despair and/or a lack of interest in things that once brought joy, affecting daily functioning.

Generalized Anxiety Disorder

A mental health disorder characterized by persistent and excessive worry about a number of different things, leading to significant distress or impairment in functioning.

Compulsion

A psychological phenomenon where individuals feel the urgent need to perform certain behaviors or rituals irrationally.

Obsession

An uncontrollable and persistent thought, idea, or feeling that dominates a person's mind.