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 Smith Traynor $ 50,000 30,000 10,000 Due to a cash shortage, Purkerson invests an additional $4,000 in the business on April 1, 2021. Each partner is allowed to withdraw $500 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, $10,000; Smith, $20,000; and Traynor, $6,00o. · Each partner is credited with interest equal to 15 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 $25,000. Each partner withdraws the allotted amount each month. Prepare a schedule showing calculations for the partners' 2021 ending capital balances. (Amounts to be deducted should be indicated with minus sign.) PURKERSON, SMITH, and TRAYNOR Statement of Partners' Capital For the Year Ending December 31, 2021 Purkerson Smith Traynor Totals Beginning balances Additional contribution Net income Drawings Ending capital balances
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 Smith Traynor $ 50,000 30,000 10,000 Due to a cash shortage, Purkerson invests an additional $4,000 in the business on April 1, 2021. Each partner is allowed to withdraw $500 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, $10,000; Smith, $20,000; and Traynor, $6,00o. · Each partner is credited with interest equal to 15 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 $25,000. Each partner withdraws the allotted amount each month. Prepare a schedule showing calculations for the partners' 2021 ending capital balances. (Amounts to be deducted should be indicated with minus sign.) PURKERSON, SMITH, and TRAYNOR Statement of Partners' Capital For the Year Ending December 31, 2021 Purkerson Smith Traynor Totals Beginning balances Additional contribution Net income Drawings Ending capital balances
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
100%
Transcribed Image Text: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:
$ 50,000
30,000
10,000
Purkerson
Smith
Traynor
Due to a cash shortage, Purkerson invests an additional $4,000 in the business on April 1, 2021.
Each partner is allowed to withdraw $500 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, $10,000; Smith, $20,000;
and Traynor, $6,000.
• Each partner is credited with interest equal to 15 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
$25,000. Each partner withdraws the allotted amount each month.
Prepare a schedule showing calculations for the partners' 2021 ending capital balances. (Amounts to be deducted should be
indicated with minus sign.)
PURKERSON, SMITH, and TRAYNOR
Statement of Partners' Capital
For the Year Ending December 31, 2021
Purkerson
Smith
Traynor
Totals
Beginning balances
Additional contribution
Net income
Drawings
Ending capital balances
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education