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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 | $ | 62,000 |
Smith |
| 42,000 |
Traynor |
| 20,000 |
Due to a cash shortage, Purkerson invests an additional $16,000 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 business's inception:
- Each partner is given the following compensation allowance for work done in the business: Purkerson, $10,000; Smith, $26,000; 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 2:3:5 to Purkerson, Smith, and Traynor, respectively. The net income for 2018 is $38,000. Each partner withdraws the allotted amount each month.
What are the ending capital balances for 2018?
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