Question:
Partnership starts its first year with the following capital balances:
Arthur, Capital $ 36,000
Baxter, Capital 46,000
Cartwright, Capital 56,000
The articles of partnership stipulate that gains and losses be assigned in the subsequent manner:
- Each partner is allocated interest equal to 8 % of the starting capital balance.
- Baxter is allocated compensation of $16,000 per year.
- Any remaining profits and losses are allocated on a 3:3:4 basis, correspondingly.
- Each partner is allowed to withdraw up to $5,000 cash per year.
Consider that the net income is $46,000 and that each partner withdraws the maximum amount allowed, what is the balance in Cartwright's capital account at the end of that year?