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Preparing a Statement of Changes in Partners Equity On January 1 Carol Farmer and Jim
Chapter 28, Problem 28-7(choose chapter or problem)
Preparing a Statement of Changes in Partners’ Equity
On January 1 Carol Farmer and Jim Romans formed a partnership, Research Consultants. Each partner invested $50,000 in cash on that date. The partnership agreement stated that the partners would share net income or loss equally.
During the year Farmer invested an additional $2,000 and withdrew $7,500 for personal use. Romans invested an additional $1,500 and withdrew $8,500. Net income for the first year was $33,176.
Instructions In your working papers, prepare a statement of changes in partners’ equity for the year ended December 31.
Analyze Identify the amount of partners’ equity for Carol Farmer that will appear on the December 31 balance sheet.
Questions & Answers
QUESTION:
Preparing a Statement of Changes in Partners’ Equity
On January 1 Carol Farmer and Jim Romans formed a partnership, Research Consultants. Each partner invested $50,000 in cash on that date. The partnership agreement stated that the partners would share net income or loss equally.
During the year Farmer invested an additional $2,000 and withdrew $7,500 for personal use. Romans invested an additional $1,500 and withdrew $8,500. Net income for the first year was $33,176.
Instructions In your working papers, prepare a statement of changes in partners’ equity for the year ended December 31.
Analyze Identify the amount of partners’ equity for Carol Farmer that will appear on the December 31 balance sheet.
ANSWER:Step 1 of 2
Statement of partners’ equity is the summary of all partners’ capital balances. It depicts the invested capital for the year, net income added to the balance, and adjustment for withdrawals.