Question

1. Financial Statements for Partnership

   The ledger of Camila Ramirez and Ping Xue, attorneys-at-law, contains the following accounts and balances after adjustments have been recorded on December 31, 20Y2:

   Ramirez and Xue
   Trial Balance
   December 31, 20Y2
   	Debit Balances		Credit Balances
   Cash	53,800
   Accounts Receivable	51,200
   Supplies	1,900
   Land	128,000
   Building	137,800
   Accumulated Depreciation—Building			80,000
   Office Equipment	58,900
   Accumulated Depreciation—Office Equipment			24,800
   Accounts Payable			38,100
   Salaries Payable			4,100
   Camila Ramirez, Capital			130,000
   Camila Ramirez, Drawing	57,600
   Ping Xue, Capital			76,800
   Ping Xue, Drawing	83,200
   Professional Fees			461,300
   Salary Expense	186,900
   Depreciation Expense—Building	18,600
   Property Tax Expense	11,500
   Heating and Lighting Expense	9,200
   Supplies Expense	6,700
   Depreciation Expense—Office Equipment	5,800
   Miscellaneous Expense	4,000
   	815,100		815,100

   The balance in Xue' capital account includes an additional investment of $13,000 made on May 5, 20Y2.

   Required:

   1. Prepare an income statement for 20Y2, indicating the division of net income. The partnership agreement provides for salary allowances of $50,000 to Ramirez and $61,000 to Xue, 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.

   Ramirez and Xue Income Statement For the Year Ended December 31, 20Y2
   Operating expenses:
   Total operating expenses
   		$

   Ramirez and Xue Division of Income For the Year Ended December 31, 20Y2
   	Camila Ramirez	Ping Xue	Total
   Division of net income:
   Salary allowance
   Interest allowance
   Remaining income
   Net income

   2. Prepare a statement of partnership equity for 20Y2. If any amounts are zero, enter in "0".

   Ramirez and Xue Statement of Partnership Equity For the Year Ended December 31, 20Y2
   	Camila Ramirez	Ping Xue	Total
   Balances, January 1, 20Y2
   Capital additions
   Net income for the year
   Partner withdrawals
   Balances, December 31, 20Y2	$	$	$

   3. Prepare a balance sheet as of the end of 20Y2.

   Ramirez and Xue Balance Sheet December 31, 20Y2
   Assets
   Current assets:
   Total current assets			$
   Property, plant, and equipment:
   Total property, plant, and equip.
   Total assets			$
   Liabilities
   Current liabilities:
   Total liabilities
   Partners' Equity
   Total partners' equity
   Total liabilities and partners' equity			$

Answer 1

Solution: