1. Explanation Partnership : It is that form of organization which is owned and managed by two or more persons who invest and share the profits and losses according to a pre-determined ratio. The income statement for 20Y3 of L&Y is as follows: L &Y Income Statement For the Year Ended December 31, 20Y3 Professional fees $395,300 Operating expenses: Salary expense $154,500 Depreciation expense—building $15,700 Property tax expense $12,000 Heating and lighting expense $8,500 Supplies expense $6,000 Depreciation expense—office equipment $5,000 Miscellaneous expense $3,600 Total operating expenses $205,300 Net income $190,000 Table (1) Hence, the net income of L&Y for the year 20Y3 is $190,000. Division of net income: The following table shows the division of net income between the partners. L Y Total Salary allowance………………… $45,000 $54,700 $99,700 Interest allowance…………… $13,500 (1) $7,800 (2) $21,300 Remaining income (1:1)………… $34,500 $34,500 $69,000 Net income…………… $93,000 $97,000 $190,000 Table (2) Working note for the calculation of Interest allowance of L & Y Interest Allowance is at 10%: Interest Allowance of L } 2. To determine Prepare statement of partnership equity for 20Y3. 3. To determine Prepare the balance sheet at the end of 20Y3.

15th Edition

ISBN: 9781337272124

Author: Carl Warren, James M. Reeve, Jonathan Duchac

Publisher: Cengage Learning

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Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 3PA

To determine

Prepare income statement for 20Y3, indicating the division of the income.

To determine

Prepare statement of partnership equity for 20Y3.

To determine

Prepare the balance sheet at the end of 20Y3.

Expert Solution & Answer

Chapter 12 Solutions

Financial Accounting

Ch. 12 - Prob. 1DQ Ch. 12 - Prob. 2DQ Ch. 12 - Prob. 3DQ Ch. 12 - Prob. 4DQ Ch. 12 - Prob. 5DQ Ch. 12 - Prob. 6DQ Ch. 12 - Prob. 7DQ Ch. 12 - Prob. 8DQ Ch. 12 - Prob. 9DQ Ch. 12 - Prob. 10DQ

Ch. 12 - Prob. 1PEA Ch. 12 - Prob. 1PEB Ch. 12 - Prob. 2PEA Ch. 12 - Prob. 2PEB Ch. 12 - Prob. 3PEA Ch. 12 - Prob. 3PEB Ch. 12 - Prob. 4PEA Ch. 12 - Prob. 4PEB Ch. 12 - Prob. 5PEA Ch. 12 - Liquidating partnerships Prior to liquidating...Ch. 12 - Prob. 6PEA Ch. 12 - Prob. 6PEB Ch. 12 - Revenue per employee Niles and Cohen, CPAs earned...Ch. 12 - Prob. 7PEB Ch. 12 - Prob. 1E Ch. 12 - Prob. 2E Ch. 12 - Prob. 3E Ch. 12 - Prob. 4E Ch. 12 - Prob. 5E Ch. 12 - Prob. 6E Ch. 12 - Prob. 7E Ch. 12 - Prob. 8E Ch. 12 - Prob. 9E Ch. 12 - Prob. 10E Ch. 12 - Prob. 11E Ch. 12 - Prob. 12E Ch. 12 - Prob. 13E Ch. 12 - Prob. 14E Ch. 12 - Prob. 15E Ch. 12 - Prob. 16E Ch. 12 - Statement of members equity, admitting new member...Ch. 12 - Distribution of cash upon liquidation Hewitt and...Ch. 12 - Distribution of cash upon liquidation David Oliver...Ch. 12 - Liquidating partnershipscapital deficiency Lewis,...Ch. 12 - Prob. 21E Ch. 12 - Prob. 22E Ch. 12 - Statement of partnership liquidation After closing...Ch. 12 - Prob. 24E Ch. 12 - Prob. 25E Ch. 12 - Revenue per professional staff The accounting firm...Ch. 12 - Prob. 27E Ch. 12 - Prob. 1PA Ch. 12 - Prob. 2PA Ch. 12 - Prob. 3PA Ch. 12 - Prob. 4PA Ch. 12 - Statement of partnership liquidation After the...Ch. 12 - Prob. 6PA Ch. 12 - Prob. 1PB Ch. 12 - Prob. 2PB Ch. 12 - Prob. 3PB Ch. 12 - Prob. 4PB Ch. 12 - Statement of partnership liquidation After the...Ch. 12 - On August 3, the firm of Chapelle, Rock, and Pryor...Ch. 12 - Prob. 1CP Ch. 12 - Prob. 3CP Ch. 12 - Prob. 4CP

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Similar questions

The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after Tatum receives a 10,000 salary and Brook receives a 15,000 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A. $40,000 B. $25,000 C. ($5,000) In addition, show the resulting entries to each partners capital account. Tatums capital account balance is $50,000 and Brooks is $60,000.
The partnership of Magda and Sue shares profits and losses in a 50:50 ratio after Mary receives a $7,000 salary and Sue receives a $6,500 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A. $10,000 B. $5,000 C. ($12,000) In addition, show the resulting entries to each partners capital account.

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