Question

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 $ 76,000 Smith 56,000 Traynor 30,000 Due to a cash shortage, Purkerson invests an additional $16,000 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, $11,000; Smith, $21,000; and Traynor, $4,000. 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 4:3:3 to Purkerson, Smith, and Traynor, respectively. The net income for 2018 is $20,000. Each partner withdraws the allotted amount each month. What are the ending capital balances for 2018?

Answer 1

	Purkerson	Smith	Traynor			Purkerson	Smith	Traynor
Cash (drawings)	1000	1000	1000		Balance b/d	76000	56000	30000
compensation allowance for work done	11000	21000	4000		Cash	16000
					Interest on capital	1533	933	500
Balance c/d	88347	40043	30610		Profit (4:3:3)	6814	5110	5110
		62043	35610			100347	62043	35610

Ending capital balance are

88347

40043

30610