The ledger of Peter Sato and May Koening, attorneys at law, contains the following accounts and balances after adjustments have been recorded on December 31, 2008:
|
|
Debit |
Credit |
|
|
Balances |
Balances |
|
Cash |
30,000 |
|
|
Accounts Receivable |
38,900 |
|
|
Supplies |
1,900 |
|
|
Land |
25,000 |
|
|
Building |
130,000 |
|
|
Accumulated Depreciation—Building |
|
69,200 |
|
Office Equipment |
39,000 |
|
|
Accumulated Depreciation—Office Equipment |
|
21,500 |
|
Accounts Payable |
|
2,100 |
|
Salaries Payable |
|
2,000 |
|
Peter Sato, Capital |
|
95,000 |
|
Peter Sato, Drawing |
50,000 |
|
|
May Koening, Capital |
|
65,000 |
|
May Koening, Drawing |
70,000 |
|
|
Professional Fees |
|
297,450 |
|
Salary Expense |
132,300 |
|
|
Depreciation Expense—Building |
10,500 |
|
|
Property Tax Expense |
7,000 |
|
|
Heating and Lighting Expense |
6,300 |
|
|
Supplies Expense |
2,850 |
|
|
Depreciation Expense—Office Equipment |
2,800 |
|
|
Miscellaneous Expense |
5,700 |
|
|
|
552,250 |
552,250 |
The balance in Koening’s capital account includes an additional investment of $8,000 made on August 10, 2008.
Instructions
1. Prepare an income statement for 2008, indicating the division of net income. The articles of partnership provide for salary allowances of $40,000 to Sato and $50,000 to Koening, 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 2008.
3. Prepare a balance sheet as of the end of 2008.