A Partnership Began Its First Year of Operations with the Following

question 33

Multiple Choice

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 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:

Somatic

Pertaining to the body, especially as distinct from the mind or the emotions.

Central

The core or most important part; in many contexts, it can refer to the central nervous system which includes the brain and spinal cord.

Growth Hormones

Proteins secreted by the pituitary gland that stimulate growth, cell reproduction, and cell regeneration in humans and other animals.

Intelligence

The ability to use knowledge to reason, make decisions, make sense of events, solve problems, understand complex ideas, learn quickly, and adapt to environmental challenges.