Question
Problem 14-22 (LO 14-4, 14-5, 14-6) Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At the beginning
Problem 14-22 (LO 14-4, 14-5, 14-6)
Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At the beginning of 2015, capital balances were as follows: |
Purkerson | $ | 50,000 |
Smith | 36,000 | |
Traynor | 15,000 | |
Due to a cash shortage, Purkerson invests an additional $10,000 in the business on April 1, 2015. |
Each partner is allowed to withdraw $800 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, $13,000; Smith, $23,000; and Traynor, $6,000. | |
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 3:3:4 to Purkerson, Smith, and Traynor, respectively. The net income for 2015 is $32,000. Each partner withdraws the allotted amount each month. |
What are the ending capital balances for 2015? |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started