Advanced Accounting 12th Edition by Joe Ben Hoyle,Thomas Schaefer , Timothy Doupnik

Exercise 21

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:
• 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
A) $70,800.
B) $86,700.
C) $73,500.
D) $81,700