Reference no: EM132927995

Jasmine Partnership began its first year of operations with the following capital balances:

J, Capital: $143,000

A, Capital: $104,000

S, Capital: $143,000

The Articles of Partnership stipulated that profits and losses be assigned in the following manner:

1. J was to be awarded an annual salary of $26,000 with $13,000 salary assigned to C
2. Each partner was to be attributed with interest equal to 10% of the capital balance as of the first day of the year
3. The remainder was to be assigned on a 4:3:3 basis, respectively.
4. Each partner was allowed to withdraw up to $13,000 per year.

If the net loss for the first year of operations was $36,000 with net income of $42,000 in the second year. Assume also that each partner withdrew the maximum amount from the business each year.

Problem a. How much was the share of income or loss for the first year of S?

Problem b. How much was the balance in the capital account at the end of the second year of S?