A partnership begins its first year with the following capital balances: Arthur, Capital.$ 60,000 LO3 Baxter, Capital.80,000

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

Arthur, Capital.$ 60,000 LO3 Baxter, Capital.80,000 Cartwright,Capital. 100,000 The articles of partnership stipulate that profits and losses be assigned in the following manner:

• Each partner is allocated interest equal to 10 percent of the beginning capital balance.

• Baxter is allocated compensation of $20,000 per year.

• Any remaining profits and losses are allocated on a 3:3:4 basis, respectively.

• Each partner is allowed to withdraw up to $5,000 cash per year.

Assuming that the net income is $50,000 and that each partner withdraws the maximum amount allowed, what is the balance in Cartwright’s capital account at the end of that year?

a. $105,800.

b. $106,200.

c. $106,900.

d. $107,400.

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Advanced Accounting

ISBN: 9780073379456

9th Edition

Authors: Joe Ben Hoyle, Timothy S. Doupnik, Thomas F. Schaefer, Oe Ben Hoyle

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