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10. A partnership begins its first year with the following capital balances: Alfred, Capital..$50,000 Bernard, Capital..$60,000 Collins, Capital..$70,000 The articles of partnership stipulate that profits
10. A partnership begins its first year with the following capital balances:
Alfred, Capital..$50,000
Bernard, Capital..$60,000
Collins, Capital..$70,000
The articles of partnership stipulate that profits and losses be assigned in the following manner.
- Each partner is allocated interest equal to 5% of the beginning capital balance.
- Bernard is allocated compensation of $18,000 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 $60,000 and that each partner withdraws the maximum amount allowed, what is the balance in Collins capital account at the end of that year?
a. $70,800
b. $86,700
c. $73,500
d. $81,700
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