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 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$76,000Smith56,000Traynor30,000

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, $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 4:3:3 to Purkerson, Smith, and Traynor, respectively. The net income for 2018 is $20,000. 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

Step: 3

blur-text-image

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 And Managerial Accounting

Authors: Jan R. Williams, Joseph V. Carcello, Mark S. Bettner, Sue Haka, Susan F. Haka

14th International Edition

0071101217, 9780071101219

More Books

Students also viewed these Accounting questions

Question

Mortality rate

Answered: 1 week ago

Question

Armed conflicts.

Answered: 1 week ago