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.

---

Definitions:

Brand's Equity

Refers to the value and strength of a brand that has been built over time through consumer recognition, perceptions, and loyalty.

Consumer Loyalty

The likelihood of customers to continue buying from a particular brand or company due to satisfaction, positive experiences, or perceived value.

Perceived Value

The customer's assessment of the worth or utility of a product or service, based on its perceived benefits versus cost.

Branding Efforts

Activities undertaken by a company to create, maintain, and strengthen a brand's identity, visibility, and reputation in the market.