Question

# A partnership begins its first year with the following capital balances Alfred, Capital \$ 36,000 Bernard,...

A partnership begins its first year with the following capital balances

 Alfred, Capital \$ 36,000 Bernard, Capital 46,000 Collins, Capital 56,000

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

Each partner is allocated interest equal to 8 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 \$46,000 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. \$57,376

B. \$68,064

C. \$63,064

D. \$60,480

 Alferd Bernard collins total interest on capital 8% 2880 3680 4480 11040 compensation 16,000 16000 total 2880 19680 4480 27040 thus remaining income = 46000-27040 18960 net income in ratio of 3:3:4 5688 5,688 7584 Alferd Bernard collins total opening balance 36,000 46,000 56,000 138,000 interest on capital 8% 2880 3680 4480 11040 compensation 16,000 16000 net income 5688 5688 7584 18960 withdrawals -5,000 -5,000 -5,000 -15,000 closing balance 39,568 66,368 63,064 169,000 answer option c) \$63,064

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