Doreen and Amy have a profit and loss sharing agreement where: 1)salaries of $20 000 each are credited,2)8% interest is allowed on capital balances 3)the remaining profit or loss is split 60-40,respectively.At the end of the year,before the distribution of profits or losses,capital account balances were $20 000 for Doreen and $10 000 for Amy.There was a profit of $30 000 before distributions to the partners.What is Amy's year-end capital account balance assuming capital balances are adjusted to reflect profits and losses?

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Amy's capital account balance is calculated by adding her salary ($20,000), interest on capital (8% of $10,000 = $800), and her share of the remaining profit. The remaining profit after salaries and interest is $30,000 - $40,000 (salaries) - $2,400 (interest) = -$12,400. Amy's share of this loss is 40% of -$12,400 = -$4,960. Her year-end balance is $10,000 (initial capital) + $20,000 (salary) + $800 (interest) - $4,960 (loss) = $25,840.

Doreen and Amy Have a Profit and Loss Sharing Agreement