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Question: Purkerson, Smith, and Traynor have operated a


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, and Traynor have operated a bookstore for a -1

Due to a cash shortage, Purkerson invests an additional $8,000 in the business on April 1, 2021.
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, $18,000; Smith, $25,000; and Traynor, $8,000.
∙ 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 4:2:4 to Purkerson, Smith, and Traynor, respectively. The net income for 2021 is $23,600. Each partner withdraws the allotted amount each month.
Prepare a schedule showing calculations for the partners’ 2021 ending capital balances.

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