PR 12-3A Financial statements for partnership
The ledger of Aiden Durant and Jasmine Adkins, attorneys-at-law, contains the following accounts and balances after adjustments have been recorded on December 31, 2012:
| Aiden, Durant, Adkins | ||
| Trial Balance | ||
| December 31, 2012 | ||
| Debit | Credit | |
| Balances | Balances | |
| Cash | 42,000 | |
| Accounts Receivable | 42,300 | |
| Supplies | 1,500 | |
| Land | 100,000 | |
| Building | 108,100 | |
| Accumulated Depreciation—Building | 62,500 | |
| Office Equipment | 46,000 | |
| Accumulated Depreciation—Office Equipment | 19,400 | |
| Accounts Payable | 29,800 | |
| Salaries Payable | 3,200 | |
| Aiden Durant, Capital | 100,000 | |
| Aiden Durant, Drawing | 45,000 | |
| Jasmine Adkins, Capital | 60,000 | |
| Jasmine Adkins, Drawing | 65,000 | |
| Professional Fees | 364,500 | |
| Salary Expense | 146,000 | |
| Depreciation Expense—Building | 14,500 | |
| Property Tax Expense | 9,000 | |
| Heating and Lighting Expense | 7,200 | |
| Supplies Expense | 5,200 | |
| Depreciation Expense—Office Equipment | 4,500 | |
| Miscellaneous Expense | 3,100 | |
| 639,400 | 639,400 |
The balance in Adkins’ capital account includes an additional investment of $10,000 made on August 10, 2012.
Instructions
1. Prepare an income statement for 2012, indicating the division of net income. The articles of partnership provide for salary allowances of $40,000 to Durant and $50,000 to Adkins, allowances of 10% on each partner’s capital balance at the beginning of the fiscal year, and equal division of the remaining net income or net loss.
2. Prepare a statement of partners’ equity for 2012.
3. Prepare a balance sheet as of the end of 2012.
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