A partnership began its first year of operations with the following capital bala

Question

A partnership began its first year of operations with the following capital balances: Young, Capital: 104,000 Thurman, Capital: 26,000 with 13,000 per year. Assume that the net loss for the first year of operations was 52,000. Assume further that each partner withdrew the maximum amount from the business each year. a. What was Young's share of income or loss for the first year?bWhat was Thurman's share of income or loss for the first year? Thurman has to invest an additional $13,000 per year so the % will change annually.

Explanation / Answer

Young, Capital: 104,000

Thurman, Capital: 26,000 with additional investment :13,000 per year

Net loss = $52000

Young's share of income or loss for the first year = 104000/130000 * 100 = 80%

= $52000 * 104000/130000 = $ 41600

Thurman's share of income or loss for the first year = 26000 / 130000 * 100 = 20%

= $ 52000 * 0.20 = 10400

Thurman has to invest an additional $13,000 per year so the % will change annually = (39000 - 26000) / 26000 * 100 = 50

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