The ledger of Dan Reeves and Ron Strange, Attorneys-at-Law, contains the following accounts and balances after adjustments have been recorded on December 31, 2006:Cash ……………….. $ 24,500Accounts Receivable …………. 40,500Supplies ……………… 2,400Land ……………….. 50,000Building ……………… 150,000Accumulated Depreciation—Building …… 77,500Office Equipment ………….. 40,000Accumulated Depreciation—Office Equipment .. 22,400Accounts Payable ………….. 1,000Salaries Payable …………….. 1,500Dan Reeves, Capital …………. 75,000Dan Reeves, Drawing ………….. 50,000Ron Strange, Capital …………. 55,000Ron Strange, Drawing ………….. 60,000Professional Fees …………… 316,750Salary Expense ……………. 84,500Depreciation Expense—Building …….. 10,500Property Tax Expense ………….. 10,000Heating and Lighting Expense ……… 9,900Supplies Expense …………… 5,750Depreciation Expense—Office Equipment …. 5,000Miscellaneous Expense ………… 6,100The balance in Strange’s capital account includes an additional investment of $5,000 made on April 5, 2006.Instructions1. Prepare an income statement for the current fiscal year, indicating the division of net income. The articles of partnership provide for salary allowances of $25,000 to Reeves and $35,000 to Strange, allowances of 12% 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 partner’s equity for 2006.3. Prepare a balance sheet as of the end of 2006.View Solution:
The ledger of Dan Reeves and Ron Strange Attorneys at Law cont



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