ACCOUNTING
The ledger of Amid Moshref and Alex Weekley, lawyers, contains the following accounts and balances after adjustments have been recorded on December 31, 2010:
Debit Credit
Balances Balances
Cash 24,200
Accounts Receivable 41,300
Supplies 6,700
Land 120,000
Building 160,000
Accumulated Amortization—Building 52,300
Office Equipment 53,000
Accumulated Amortization—Office Equipment 21,300
Accounts Payable 3,400
Salaries Payable 5,200
Amid Moshref, Capital 125,000
Amid Moshref, Withdrawals 50,000
Alex Weekley, Capital 160,000
Alex Weekley, Withdrawals 60,000
Professional Fees 562,200
Salaries Expense 312,300
Amortization Expense 81,700
Property Tax Expense 3,500
Heating and Lighting Expense 11,200
Supplies Expense 3,400
Miscellaneous Expense 2,100
929,400 929,400
The balance in Weekley’s capital account includes an additional investment of $20,000 made on April 5, 2010.
Instructions
1. Prepare an income statement for the current fiscal year, indicating the division of net income as shown on page 568. The articles of partnership provide for salary allowances of $60,000 to Moshref and $75,000 to Weekley, 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 2010.
3. Prepare a balance sheet as of the end of 2010.
Check: 2. Dec. 31 capital—Weekley, $182,400
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