Answered step by step
Verified Expert Solution
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 as
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 | $ | 52,000 |
Smith | 32,000 | |
Traynor | 15,000 | |
Due to a cash shortage, Purkerson invests an additional $5,000 in the business on April 1, 2018.
Each partner is allowed to withdraw $600 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, $11,000; Smith, $21,000; and Traynor, $4,000.
- Each partner is credited with interest equal to 20 percent of the average monthly capital balance for the year without regard for normal drawings.
- Any remaining profit or loss is allocated 5:2:3 to Purkerson, Smith, and Traynor, respectively. The net income for 2018 is $27,000. Each partner withdraws the allotted amount each month.
What are the ending capital balances for 2018?
ending capital balances | |
Purkerson | ? |
smith | ? |
trynor ?
Totals: ?
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