tion Saved Help Save A partnership begins its first year of operations with the

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tion Saved Help Save A partnership begins its first year of operations with the following capital balances: Winston, Capital Durham, Capital Salem, Capital $ 86,000 76,000 86,000 According to the articles of partnership, all profits will be assigned as follows: . Winston will be awarded an annual salary of $10,000 with $5,000 assigned to Salem. . The partners will be attributed interest equal to 10 percent of the capital balance as of the first day of the year . The remainder will be assigned on a 5:2:3 basis, respectively. . Each partner is allowed to withdraw up to $7,000 per year The net loss for the first year of operations is $32,000 and net income for the subsequent year is s25,000. Each partner withdraws the maximum amount from the business each period. What is the balance in Winston's capital account at the Multiple Choice ere to search

Explanation / Answer

Supporting calculations Year1 Winston Durham Salem Total Net Loss -32000 Salary allowance 10000 0 5000 -15000 Remaining Loss -47000 Interest on capital 8600 7600 8600 -24800 Remaining Loss -71800 Balance alloccated 5:;2:3 -35900 -14360 -21540 71800 Balance of Lloss 0 Share of Partners -17300 -6760 -7940 Capital at the end of Year-1 Winston Durham Salem Total Beginning Cappital 86000 76000 86000 248000 Less: Share of loss -17300 -6760 -7940 -32000 Less: Withdrawl -7000 -7000 -7000 -21000 Ending capital 61700 62240 71060 195000 Supporting caculation Year-2 Winston Durham Salem Total Net income 25000 Salary allowance 10000 0 5000 -15000 Remaining income 10000 Interest on capital 6170 6224 7106 19500 Remaining Loss -9500 Balance alloccated 5:;2:3 -4750 -1900 -2850 9500 Balance of income 0 Share of Partners 11420 4324 9256 Capital at the end of Year-2 Winston Durham Salem Total Beginning Cappital 61700 62240 71060 195000 Add: Nnet income share 11420 4324 9256 25000 Less: Withdrawl -7000 -7000 -7000 -21000 Ending capital 66120 59564 73316 199000 Answer is $ 66120

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