Reference no: EM132878255

Problem - Financial statements for partnership - The ledger of Aiden Durant and Jasmine Adkins, attorneys-at-law, contains the following accounts and balances after adjustments have been recorded on December 31, 2012:

Aiden, Durant, Adkins Trial Balance December 31, 2012
	Debit Balances	Credit Balances
Cash	42,000
Accounts Receivable	42,300
Supplies	1,500
Land	100,000
Building	108,100
Accumulated Depreciation-Building		62,500
Office Equipment	46,000
Accumulated Depreciation-Office Equipment		19,400
Accounts Payable		29,800
Salaries Payable		3,200
Aiden Durant, Capital		100,000
Aiden Durant, Drawing	45,000
Jasmine Adkins, Capital		60,000
Jasmine Adkins, Drawing	65,000
Professional Fees		364,500
Salary Expense	146,000
Depreciation Expense-Building	14,500
Property Tax Expense	9,000
Heating and Lighting Expense	7,200
Supplies Expense	5,200
Depreciation Expense-Office Equipment	4,500
Miscellaneous Expense	3,100
	639,400	639,400

The balance in Adkins' capital account includes an additional investment of $10,000 made on August 10, 2012.

Required -

1. Prepare an income statement for 2012, indicating the division of net income. The articles of partnership provide for salary allowances of $40,000 to Durant and $50,000 to Adkins, 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.

2. Prepare a statement of partners' equity for 2012. Prepare a balance sheet as of the end of 2012.