A Partnership Began Its First Year of Operations with the Following

question 8

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 Young's Capital account at the end of the second year?

• A) $133,380.
• B) $84,760.
• C) $105,690.
• D) $132,860.
• E) $71,760.

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Definitions:

Life Change

A significant shift in one's circumstances, habits, or outlook, typically leading to personal growth or a new direction in life.

Alter

To change or modify something.

Marry

To enter into a legal and cultural relationship of partnership, typically recognized by civil, religious, or social norms.

Family Problem

Issues or conflicts arising within a family unit, affecting the functioning or well-being of its members.