PR 12-3B Financial statements for partnerships
The ledger of Jin Ding and Paul Hoffman, attorneys-at-law, contains the following accounts and balances after adjustments have been recorded on December 31, 2012:
| Ding and Hoff man | ||
| Trial Balance | ||
| December 31, 2012 | ||
| Debit | Credit | |
| Balances | Balances | |
| Cash | 26,900 | |
| Accounts Receivable | 41,300 | |
| Supplies | 6,700 | |
| Land | 140,000 | |
| Building | 160,000 | |
| Accumulated Depreciation—Building | 52,000 | |
| Office Equipment | 62,000 | |
| Accumulated Depreciation—Office Equipment | 21,300 | |
| Accounts Payable | 3,400 | |
| Salaries Payable | 5,200 | |
| Jin Ding, Capital | 130,000 | |
| Jin Ding, Drawing | 50,000 | |
| Paul Hoff man, Capital | 170,000 | |
| Paul Hoff man, Drawing | 60,000 | |
| Professional Fees | 583,200 | |
| Salary Expense | 315,700 | |
| Depreciation Expense—Building | 75,000 | |
| Heating and Lighting Expense | 11,900 | |
| Depreciation Expense—Office Equipment | 6,700 | |
| Property Tax Expense | 3,500 | |
| Supplies Expense | 3,400 | |
| Miscellaneous Expense | 2,000 | |
| 965,100 | 965,100 |
The balance in Hoffman’s capital account includes an additional investment of $20,000 made on April 5, 2012.
Instructions
1. Prepare an income statement for the current fiscal year, indicating the division of net income. The articles of partnership provide for salary allowances of $60,000 to Ding and $75,000 to Hoffman, allowances of 12% 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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