Question
Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At the beginning of 2015, capital balances were as
Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At the beginning of 2015, capital balances were as follows: |
Purkerson | $ | 82,000 |
Smith | 62,000 | |
Traynor | 30,000 | |
Due to a cash shortage, Purkerson invests an additional $6,000 in the business on April 1, 2015. |
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, $14,000; Smith, $24,000; 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 3:2:5 to Purkerson, Smith, and Traynor, respectively. The net income for 2015 is $24,000. Each partner withdraws the allotted amount each month. |
What are the ending capital balances for 2015?
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