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Preparing an Income Statement and Balance Sheet for a Partnership Joy Webster and Diana
Chapter 28, Problem 28-4(choose chapter or problem)
Preparing an Income Statement and Balance Sheet for a Partnership
Joy Webster and Diana Ruiz have been in business since the beginning of the year. Now at the end of the year, they would like to know how the partnership has done in its first year of operation. Joy and Diana stated in the partnership agreement that they will share profits equally. The net income for the year was $5,780. The January 1 capital balances for both partners were $0. Joy invested $6,000 cash in the partnership throughout the year and withdrew $1,800. Diana invested $5,500 cash in the partnership and withdrew $1,200.
Instructions In your working papers, prepare the Division of Net Income section of the income statement and the Partners’ Equity section of the balance sheet for the partnership.
Analyze Identify the ending balances in the partners’ capital accounts.
Questions & Answers
QUESTION:
Preparing an Income Statement and Balance Sheet for a Partnership
Joy Webster and Diana Ruiz have been in business since the beginning of the year. Now at the end of the year, they would like to know how the partnership has done in its first year of operation. Joy and Diana stated in the partnership agreement that they will share profits equally. The net income for the year was $5,780. The January 1 capital balances for both partners were $0. Joy invested $6,000 cash in the partnership throughout the year and withdrew $1,800. Diana invested $5,500 cash in the partnership and withdrew $1,200.
Instructions In your working papers, prepare the Division of Net Income section of the income statement and the Partners’ Equity section of the balance sheet for the partnership.
Analyze Identify the ending balances in the partners’ capital accounts.
ANSWER:Step 1 of 3
A partnership's income statement and equity statement are prepared in the same way as other business forms. It helps to determine the amount of profit earned by each partner in the partnership.