# Question: A partnership begins its first year with the following capital

A partnership begins its first year with the following capital balances:
Arthur, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$ 60,000
Baxter, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Cartwright, Capital . . . . . . . . . . . . . . . . . . . . . . . . . 100,000

The articles of partnership stipulate that profits and losses be assigned in the following manner:
• Each partner is allocated interest equal to 10 percent of the beginning capital balance.
• Baxter is allocated compensation of \$20,000 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 \$50,000 and that each partner withdraws the maximum amount allowed, what is the balance in Cartwright’s capital account at the end of that year?
a. \$105,800.
b. \$106,200.
c. \$106,900.
d. \$107,400.

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