Question
A partnership begins its first year with the following capital balances: Alfred, Capital $ 68,000 Bernard, Capital 78,000 Collins, Capital 88,000 The articles of partnership
A partnership begins its first year with the following capital balances:
Alfred, Capital | $ | 68,000 |
Bernard, Capital | 78,000 | |
Collins, Capital | 88,000 | |
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.
Bernard is allocated compensation of $12,000 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 $78,000 and that each partner withdraws the maximum amount allowed, what is the balance in Collins capital account at the end of that year?
Multiple Choice
a. $108,840
b. $113,840
c. $96,060
d. $96,800
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started