Norr and Caylor Established a Partnership on January 1, 2012

question 12

Essay

Norr and Caylor established a partnership on January 1, 2012. Norr invested cash of $100,000 and Caylor invested $30,000 in cash and equipment with a book value of $40,000 and fair value of $50,000. For both partners, the beginning capital balance was to equal the initial investment. Norr and Caylor agreed to the following procedure for sharing profits and losses:
- 12% interest on the yearly beginning capital balance
- $10 per hour of work that can be billed to the partnership's clients
- the remainder divided in a 3:2 ratio
The Articles of Partnership specified that each partner should withdraw no more than $1,000 per month.
For 2012, the partnership's income was $70,000. Norr had 1,000 billable hours, and Caylor worked 1,400 billable hours. In 2013, the partnership's income was $24,000, and Norr and Caylor worked 800 and 1,200 billable hours respectively. Each partner withdrew $1,000 per month throughout 2012 and 2013.
Determine the balance in both capital accounts at the end of 2012.

---

Definitions:

Business Writing

A form of writing that focuses on clear, concise, and professional communication within a business context.

Transitional Elements

Components used in writing or speech that help smoothly connect ideas, sentences, or paragraphs, facilitating a coherent flow.

Shift in Ideas

A change or transformation in the prevailing thoughts, beliefs, or perspectives within a society or group.

Mobile Device

A portable computing device such as a smartphone or tablet that allows for internet access and the running of applications.