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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

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