What are the ending capital balances

Assignment Help Accounting Basics

Reference no: EM131965732

Problem

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 $ 72,000
Smith 52,000
Traynor 20,000

Due to a cash shortage, Purkerson invests an additional $12,000 in the business on April 1, 2015.

Each partner is allowed to withdraw $900 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 5:2:3 to Purkerson, Smith, and Traynor, respectively. The net income for 2015 is $30,000. Each partner withdraws the allotted amount each month.

What are the ending capital balances for 2015?

Reference no: EM131965732

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