Problem 13-6 (L03, 4) Profit allocation involving interest on capital balances. Rivera, Sampson, and Elliott are partners in a commercial plumbing business. Rivera and Sampson have also started another contracting company and have cash flow needs, which require periodic distributions from the partnership. In order to deal fairly with the level Of part- nership withdrawals, the partnership agreement calls for profit sharing as follows: Component Salaries Bonus on income after the bonus. Interest on "average net capital" Percentage of remaining profits. Rivera $80,000 Sampson $80,000 I ooz Elliott $100,000 I OOZ I OOZ "Average net capital" is determined by netting the partners' drawing accounts against their capital accounts and weighting the net amounts for the appropriate portion Of the year. On March 3 1 and September 30, $40,000 is allocated to each partner's capital account in anticipa- tion Of the annual actual amount Of profit. Activity in the drawing and capital accounts is as follows for the current calendar year: Drawing Account Beginning balance January 1 March 3 1 draws June 30 draws . September 30 draws.. Capital Account Beginning balance January 1 March 3 1 anticipated profit allocation March 3 1 capital investment. September 30 anticipated profit allocation.... .. September 30 loan conversion . Rivera 30,000 10,000 20,000 40,000 40,000 40,000 Sampson 40,000 25,000 50,000 50,000 40,000 40,000 15,000 Elliott 30,000 20,000 70,000 40,000 40,000 40,000 Sampson had loaned the partnership money in the past, and the transaction was properly classified as a loan payable on the statements Of the partnership. On September 30, the loan and accrued interest totaling $15 were converted from a loan payable to a capital investment in the partnership. Determine how the current-year profit Of $330,000 is to be allocated among the partners.