Question
Darcy, Jackson, and Truman have a retail partnership business selling personal computers. The partners are allowed an interest allocation of 8% on their average capital.
Darcy, Jackson, and Truman have a retail partnership business selling personal computers. The partners are allowed an interest allocation of 8% on their average capital. Capital account balances on the first day of each month are used in determining weighted average capital, regardless of additional partner investment or withdrawal transactions during any given month. Withdrawals of capital that are debited to and investments "in" that are credited to the capital account are used in the average calculation. Partner capital activity for the year was:
CapitalaccountsDarcyJacksonTruman
Jan 1balance$200,000$300,000$ 250,000
Feb 28investment50,000
Mar 16investment10,00020,000
Apr 20withdrawal(10,000)
Jul 3 withdrawal andinvestment(7,000)10,000
Sep 29investment5,0004,0005,000
Nov 5investment5,000
Required:
Calculate theweighted average capital for each partner, and determine the amount of interest that each partner will be allocated. Round all calculations to the nearest whole dollar.
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