Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At
Question:
Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At the beginning of 2009, capital balances were as follows:
Purkerson. $60,000 Smith. 40,000 LO3 Traynor. 20,000 Due to a cash shortage, Purkerson invests an additional $8,000 in the business on April 1, 2009. Each partner is allowed to withdraw $1,000 cash each month.
The partners have used the same method of allocating profits and losses since the business's inception:
• Each partner is given the following compensation allowance for work done in the business: Purkerson, $18,000; Smith, $25,000; and Traynor, $8,000.
• Each partner is credited with interest equal to 10 percent of the average monthly capital balance for the year without regard for normal drawings.
• Any remaining profit or loss is allocated 4:2:4 to Purkerson, Smith, and Traynor, respectively. The net income for 2009 is $23,600. Each partner withdraws the allotted amount each month.
What are the ending capital balances for 2009?
Step by Step Answer:
Advanced Accounting
ISBN: 9780073379456
9th Edition
Authors: Joe Ben Hoyle, Timothy S. Doupnik, Thomas F. Schaefer, Oe Ben Hoyle