Reference no: EM132954336
Question - A, B, and C formed a partnership selling personal computers. The partners are allowed an interest allocation of 8% on their average capital. Capital account balances on the first day of each month are used in determining weighted average capital, regardless of additional partner investment and withdrawal transactions during any given month. Drawing are disregarded in computing average capital, but temporary withdrawals of capital that are debited to the capital account are used in the average calculation. Partner capital activity for the year was:
Capital balances: A B C
Beginning balances 200,000 300,000 250 000
February 2 investment 50,000
March 6 investment 10,000 20,000
April 20 withdrawal (10,000)
June 3 (withdrawal) and (7,000)
June 3 investment 10,000
Sept 29 investment 5,000 4,000 5,000
Nov 5 investment 5,000
Required - Calculate the weighted average capital for each partner, and determine the amount of interest that each partner will be allocated.
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