Reference no: EM132478

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?