A partnership begins its first year with the following capital balances: Arthur, Capital.$ 60,000 LO3 Baxter, Capital.80,000
Question:
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.
Step by Step Answer:
Advanced Accounting
ISBN: 9780073379456
9th Edition
Authors: Joe Ben Hoyle, Timothy S. Doupnik, Thomas F. Schaefer, Oe Ben Hoyle