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Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At the beginning of 2021, capital balances were as
Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At the beginning of 2021, capital balances were as follows:
Purkerson | $ | 96,000 |
Smith | 76,000 | |
Traynor | 30,000 | |
Due to a cash shortage, Purkerson invests an additional $6,000 in the business on April 1, 2021.
Each partner is allowed to withdraw $700 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, $15,000; Smith, $25,000; and Traynor, $8,000.
- 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 4:2:4 to Purkerson, Smith, and Traynor, respectively. The net income for 2021 is $29,000. Each partner withdraws the allotted amount each month.
Prepare a schedule showing calculations for the partners' 2021 ending capital balances
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