Question
A partnership began its first year of operations with the following capital balances: Neil Capital 143,000 Matthew 104,000 Vino Capital 143,000. The Articles of Partnership
A partnership began its first year of operations with the following capital balances: Neil Capital 143,000 Matthew 104,000 Vino Capital 143,000. The Articles of Partnership stipulated that profits and losses be assigned in the following manner; Neil was to be awarded an annual salary of 26,000 with 13,000 salary assigned to Vino. 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 , respectively. Each partner was allowed to withdraw up to 13,000 a 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. Assume further that each partner withdrew the maximum amount from the business each year . What was Matthew's share of income or loss for the second year?
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