A Partnership Began Its First Year of Operations with the Following

question 78

Multiple Choice

A partnership began its first year of operations with the following capital balances: 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 Eaton'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:

Pregnancy

The condition of having a developing embryo or fetus in the body, typically lasting about 40 weeks in humans from the last menstrual period to childbirth.

Abortion

The termination of pregnancy; spontaneous or induced.

Extrinsic Reward

A reward given by an external source, such as money or praise, which motivates certain behaviors or actions.

End-of-Year Bonus

A monetary incentive given to employees at the end of the calendar year, often based on company performance, profitability, or individual achievement.