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A partnership begins its first year with the following capital balances: Alfred, Capital $ 60,000 Bernard,...

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

Alfred, Capital $ 60,000
Bernard, Capital 70,000
Collins, Capital 80,000

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 $16,000 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 $70,000 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

  • $84,000

  • $83,350

  • $101,400

  • $96,400

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