Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

. Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At the beginning of 2018, capital balances were

. Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At the beginning of 2018, capital balances were as follows:

Purkerson..$60,000

Smith..$40,000

Traynor..$20,000

Due to a cash shortage, Perkerson invests an additional $8,000 in the business on April 1, 2018.

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 businesss 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 2018 is $23,600. Each partner withdraws the allotted amount each month.

What are the ending capital balances for 2018?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting An Introduction

Authors: Pauline Weetman

7th Edition

1292086696, 978-1292086699

More Books

Students explore these related Accounting questions