Question

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	52,900
Accounts Receivable	50,400
Supplies	1,900
Land	126,000
Building	137,300
Accumulated Depreciation—Building			78,800
Office Equipment	58,000
Accumulated Depreciation—Office Equipment			24,400
Accounts Payable			37,500
Salaries Payable			4,000
Camila Ramirez, Capital			130,000
Camila Ramirez, Drawing	56,700
Ping Xue, Capital			75,600
Ping Xue, Drawing	81,900
Professional Fees			453,700
Salary Expense	184,000
Depreciation Expense—Building	18,300
Property Tax Expense	11,300
Heating and Lighting Expense	9,100
Supplies Expense	6,600
Depreciation Expense—Office Equipment	5,700
Miscellaneous Expense	3,900
	804,000		804,000

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 $49,000 to Ramirez and $60,000 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
		fill in the blank 2
Operating expenses:
	fill in the blank 4
	fill in the blank 6
	fill in the blank 8
	fill in the blank 10
	fill in the blank 12
	fill in the blank 14
	fill in the blank 16
Total operating expenses		fill in the blank 17
		$fill in the blank 19

Ramirez and Xue Division of Income For the Year Ended December 31, 20Y2
	Camila Ramirez	Ping Xue	Total
Division of net income:
Salary allowance	fill in the blank 20	fill in the blank 21	fill in the blank 22
Interest allowance	fill in the blank 23	fill in the blank 24	fill in the blank 25
Remaining income	fill in the blank 26	fill in the blank 27	fill in the blank 28
Net income	fill in the blank 29	fill in the blank 30	fill in the blank 31

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	fill in the blank 32	fill in the blank 33	fill in the blank 34
Capital additions	fill in the blank 35	fill in the blank 36	fill in the blank 37
Net income for the year	fill in the blank 38	fill in the blank 39	fill in the blank 40
Partner withdrawals	fill in the blank 41	fill in the blank 42	fill in the blank 43
Balances, December 31, 20Y2	$fill in the blank 44	$fill in the blank 45	$fill in the blank 46

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

Ramirez and Xue Balance Sheet December 31, 20Y2
Assets
Current assets:
		fill in the blank 48
		fill in the blank 50
		fill in the blank 52
Total current assets			$fill in the blank 53
Property, plant, and equipment:
		fill in the blank 55
	fill in the blank 57
	fill in the blank 59	fill in the blank 60
	fill in the blank 62
	fill in the blank 64	fill in the blank 65
Total property, plant, and equip.			fill in the blank 66
Total assets			$fill in the blank 67
Liabilities
Current liabilities:
		fill in the blank 69
		fill in the blank 71
Total liabilities			fill in the blank 72
Partners' Equity
		fill in the blank 74
		fill in the blank 76
Total partners' equity			fill in the blank 77
Total liabilities and partners' equity			$fill in the blank 78

Answer 1

1.

RAMIREZ AND XUE
Income Statement for the year ended December 31, 20Y2
Particulars	Amount ($)	Amount ($)
Professional Fees		$453700
Operating Expenses:
Salary expense	$184000
Depreciation expense - building	18300
Heating & Lighting expense	9100
Depreciation expense - office equipment	5700
Property tax expense	11300
Supplies expense	6600
Miscellaneous expense	3900
Total Operating expenses		$238900
Net Income		$214800

Camila Ramirez Ping Xue Total

Division of net income:

Salary allowance   $49000 $60000 $109000

Interest allowance   $13000     $6260 $19260

Remaining Income (1:1) $43270    $43270 $86540

Net Income $105270 $109530 $214800

*$130000*10%

**($75600 - $13000)*10%   

2.

RAMIREZ AND XUE
Statement of Partnership Equity for the year ended December 31, 20Y2
	Camila Ramirez	Ping Xue	Total
Capital, January 1, 20Y2	$130000	$62600	$192600
Additional investment during the year	-	13000	13000
	$130000	$75600	$205600
Net income for the year	105270	109530	214800
	$235270	$185130	$420400
Withdrawals during the year	56700	81900	138600
Capital, December 31,20Y2	$178570	$103230	$281800

3.

RAMIREZ AND XUE
Balance Sheet
ASSETS
Current Assets:
Cash		$52900
Accounts receivable		50400
Supplies		1900
Total Current Assets			$105200
Long term Assets:
Land		$126000
Building	$137300
Less: Accumulated Depreciation	78800	58500
Office equipment	$58000
Less: Accumulated Depreciation	24400	33600
Total Long Term Assets			$218100
Total Assets			$323300
EQUITY AND LIABILITIES
Current Liabilities:
Accounts Payable		$37500
Salaries Payable		4000
Total Liabilities			$41500
Partners Equity
Camila Ramirez,capital		$178570
Ping Xue, capital		103230
Total Partners equity			$281800
Total Liabilities and Partners Equity			$323300