Purkerson, Smith, and Traynor have operated a bookstore balances were as follows: a number of years as a partnership. At the beginning of 2021, capital Purkerson Smith $ 98,000 78,000 20,000 Traynor 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, $10,000; Smith, $20,000; 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 5:3:2 to Purkerson, Smith, and Traynor, respectively. The net income for 2021 is $20,000. 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 2$ 0 $ O $ O $
Purkerson, Smith, and Traynor have operated a bookstore balances were as follows: a number of years as a partnership. At the beginning of 2021, capital Purkerson Smith $ 98,000 78,000 20,000 Traynor 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, $10,000; Smith, $20,000; 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 5:3:2 to Purkerson, Smith, and Traynor, respectively. The net income for 2021 is $20,000. 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 2$ 0 $ O $ O $
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter12: Accounting For Partnerships And Limited Liability Companies
Section: Chapter Questions
Problem 3PA
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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
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
$ 98,000
78,000
20,000
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, $10,000; Smith, $20,000;
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 5:3:2 to Purkerson, Smith, and Traynor, respectively. The net income for 2021 is $20,000.
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
$
O $
0 $
$
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