A Partnership Began Its First Year of Operations with the Following

question 68

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 Thurman's total share of net loss for the first year?

• A) $3,900 loss.
• B) $11,700 loss.
• C) $10,400 loss.
• D) $24,700 loss.
• E) $9,100 loss.

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Definitions:

Hydrogenation

The chemical reaction where hydrogen is added to another compound, often used to convert unsaturated bonds to saturated ones in hydrocarbons.

Bredt's Rule

A principle stating that bridged bicyclic compounds cannot have a double bond at a bridgehead position unless one of the rings contains at least eight carbon atoms, due to stability issues.

Stable Diene

A type of organic compound with two double bonds that exhibits stability in its structure and reactivity.

Cycloalkenes

Unsaturated hydrocarbons containing one or more carbon-carbon double bonds within a cyclic structure.