A Partnership Began Its First Year of Operations with the Following

question 86

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 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:

Mechanistic Design

A structure in organizations characterized by strict procedures, rigid divisions of labor, and centralized decision making.

Formal Coordination

A process where organizational activities are aligned and managed through explicit and official policies, procedures, and structures.

Specific Tasks

Distinct activities or assignments that are designed to achieve a particular objective within a set timeframe.

Situational Contingencies

Refers to external or internal factors that influence the effectiveness of management strategies and decision-making processes.