A partnership begins its first year with the following capital balances:The articles of partnership stipulate that profits and losses be assigned in the following manner:Bernard is allocated compensation of $18,000 per year.Each partner is allowed to withdraw up to $5,000 cash 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?$70,800$86,700$73,500$81,700 Alfred, CapitalBernard, Capital...$ 50,00060,000Collins, Capital....70,000

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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

The articles of partnership stipulate that profits and losses be assigned in the following manner:

Bernard is allocated compensation of $18,000 per year.
Each partner is allowed to withdraw up to $5,000 cash 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?

$70,800
$86,700
$73,500
$81,700

Alfred, Capital
Bernard, Capital...
$ 50,000
60,000
Collins, Capital....
70,000

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