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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 36,000 15,000 Due to a cash shortage, Purkerson invests an additional $10,000 in the business on April 1, 2021. Each partner is allowed to withdraw $800 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, $13,000; Smith, $23,000; and Traynor, $6,000. • 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 3:3:4 to Purkerson, Smith, and Traynor, respectively. The net income for 2021 is $32,000. 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

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 36,000 15,000 Due to a cash shortage, Purkerson invests an additional $10,000 in the business on April 1, 2021. Each partner is allowed to withdraw $800 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, $13,000; Smith, $23,000; and Traynor, $6,000. • 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 3:3:4 to Purkerson, Smith, and Traynor, respectively. The net income for 2021 is $32,000. 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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 36,000 15,000 Due to a cash shortage, Purkerson invests an additional $10,000 in the business on April 1, 2021. Each partner is allowed to withdraw $800 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, $13,000; Smith, $23,000; and Traynor, $6,000. • 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 3:3:4 to Purkerson, Smith, and Traynor, respectively. The net income for 2021 is $32,000. 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.) Beginning balances Additional contribution Net income Drawings Ending capital balances PURKERSON, SMITH, and TRAYNOR Statement of Partners' Capital For the Year Ending December 31, 2021 Purkerson Smith $ 50,000 $ 10,000 $ (9,600) 50,400 $ 36,000 $ (9,600) 26,400 $ Traynor Totals 15,000 $ 101,000 10,000 0 (9,600) 5,400 $ (28,800) 82,200
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: Purkerson Smith Traynor $ 50,000 36,000 15,000 Due to a cash shortage, Purkerson invests an additional $10,000 in the business on April 1, 2021. Each partner is allowed to withdraw $800 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, $13,000; Smith, $23,000; and Traynor, $6,000. • 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 3:3:4 to Purkerson, Smith, and Traynor, respectively. The net income for 2021 is $32,000. 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.) Beginning balances Additional contribution Net income Drawings Ending capital balances PURKERSON, SMITH, and TRAYNOR Statement of Partners' Capital For the Year Ending December 31, 2021 Purkerson Smith $ 50,000 $ 10,000 $ (9,600) 50,400 $ 36,000 $ (9,600) 26,400 $ Traynor Totals 15,000 $ 101,000 10,000 0 (9,600) 5,400 $ (28,800) 82,200
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