### Create an Account

Already have account?

### Forgot Your Password ?

Home / Questions / Purkerson \$60000 Smith 40000 Traynor Due to a cash shortage, Purkerson invests an additi...

# Purkerson \$60000 Smith 40000 Traynor Due to a cash shortage, Purkerson invests an additional \$8000 in the business on April 1 2018 Each partner is allowed to withdraw \$1000 cash each month

Purkerson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$60,000

Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000

Traynor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000

Due to a cash shortage, Purkerson invests an additional \$8,000 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, \$18,000; Smith, \$25,000; and Traynor, \$8,000.

∙ 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 4:2:4 to Purkerson, Smith, and Traynor, respectively.

The net income for 2018 is \$23,600. Each partner withdraws the allotted amount each month.

What are the ending capital balances for 2018?

Apr 26 2020 View more View Less