A partnership begins its first year of operations with the following capital balances:

Winston, Capital	$110,000
Durham, Capital	80,000
Salem, Capital	110,000

According to the articles of partnership, all profits will be assigned as follows:

• Winston will be awarded an annual salary of $20,000 with $10,000 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 $10,000 per year.

The net loss for the first year of operations is $20,000 and net income for the subsequent year is $40,000. Each partner withdraws the maximum amount from the business each period.

1. How much of the net loss will be allocated to Winstons capital account in year 1?
   1. $3,000
   2. $4,000
   3. $9,000
   4. $10,000
2. Refer to facts from question 1. How much of the net loss will be allocated to Durhams capital account in Year 1?
   1. $4,000
   2. $8,000
   3. $9,000
   4. $10,000
3. Refer to facts from question 1. How much of the net loss will be allocated to Salems capital account in Year 1?
   1. $3,000
   2. $4,000
   3. $9,000
   4. $10,000
4. Refer to facts from question 1. What is the balance of Winstons Capital account at the end of year 2?
   1. $91,000
   2. $111,000
   3. $55,200
   4. $102,600