A Partnership Began Its First Year of Operations with the Following

question 80

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 second year?

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

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Definitions:

Metazoan

A multicellular organism of the kingdom Animalia, characterized by complex structures and systems that perform specific functions.

Animal

refers to a multicellular, eukaryotic organism that is typically mobile, responsive to its environment, and sustains itself by consuming organic matter.

Sponge

Simple aquatic animals with porous bodies through which water can circulate, belonging to the phylum Porifera.

Blastopore

The opening that develops during early embryonic development, leading to the formation of the digestive tract in animals.