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

Alfred, Capital

$ 50,000Bernard, Capital

60,000Collins, 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 percent 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?

1. $70,800
2. $86,700
3. $73,500
4. $81,700