Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At the beginning of 2018, capital balances were as follows: Purkerson $ 86,000 Smith 66,000 Traynor 30,000 Due to a cash shortage, Purkerson invests an additional $12,000 in the business on April 1, 2018. 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, $10,000; Smith, $26,000; and Traynor, $6,000. 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 4:2:4 to Purkerson, Smith, and Traynor, respectively. The net income for 2018 is $28,000. Each partner withdraws the allotted amount each month. What are the ending capital balances for 2018
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.
Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. At the beginning of 2018, capital balances were as follows:
| Purkerson | $ | 86,000 |
| Smith | 66,000 | |
| Traynor | 30,000 | |
Due to a cash shortage, Purkerson invests an additional $12,000 in the business on April 1, 2018.
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, $10,000; Smith, $26,000; and Traynor, $6,000.
- 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 4:2:4 to Purkerson, Smith, and Traynor, respectively. The net income for 2018 is $28,000. Each partner withdraws the allotted amount each month.
What are the ending capital balances for 2018?
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