The ledger of Peter Dixon and May Fawler, attorneys-at-law, contains the following accounts and balances after adjustments have been recorded on December 31, 2006:Cash ………………… $ 22,000Accounts Receivable ………….. 38,900Supplies ………………. 1,900Land ………………… 25,000Building ………………. 130,000Accumulated Depreciation—Building …….. 69,200Office Equipment …………… 39,000Accumulated Depreciation—Office Equipment …. 21,500Accounts Payable …………… 2,100Salaries Payable ……………. 2,000Peter Dixon, Capital …………… 75,000Peter Dixon, Drawing ………….. 60,000May Fawler, Capital ……………. 55,000May Fawler, Drawing …………… 75,000Professional Fees …………….. 285,650Salary Expense …………….. 80,500Depreciation Expense—Building ………. 10,500Property Tax Expense …………… 8,000Heating and Lighting Expense ……….. 7,900Supplies Expense ……………. 2,850Depreciation Expense—Office Equipment ……. 2,800Miscellaneous Expense ………….. 6,100The balance in Fawler’s capital account includes an additional investment of $5,000 made on August 10, 2006.Instructions1. Prepare an income statement for 2006, indicating the division of net income. The articles of partnership provide for salary allowances of $30,000 to Dixon and $40,000 to Fawler, 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 Peter Dixon and May Fawler attorneys at law cont



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