12-3

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Financial Statements for Partnership

The ledger of Camila Ramirez and Ping Xue, attorneys-at-law, contains the following accounts and balances after adjustments have been recorded on December 31, 20Y2:

Ramirez and Xue
Trial Balance
December 31, 20Y2
	Debit Balances		Credit Balances
Cash	50,000
Accounts Receivable	47,600
Supplies	1,800
Land	119,000
Building	129,800
Accumulated DepreciationBuilding			74,400
Office Equipment	54,700
Accumulated DepreciationOffice Equipment			23,100
Accounts Payable			35,500
Salaries Payable			3,800
Camila Ramirez, Capital			120,000
Camila Ramirez, Drawing	53,600
Ping Xue, Capital			71,400
Ping Xue, Drawing	77,400
Professional Fees			431,300
Salary Expense	173,700
Depreciation ExpenseBuilding	17,300
Property Tax Expense	10,700
Heating and Lighting Expense	8,600
Supplies Expense	6,200
Depreciation ExpenseOffice Equipment	5,400
Miscellaneous Expense	3,700
	759,500		759,500

The balance in Xue' capital account includes an additional investment of $12,000 made on May 5, 20Y2.

Required:

1. Prepare an income statement for 20Y2, indicating the division of net income. The partnership agreement provides for salary allowances of $47,000 to Ramirez and $58,000 to Xue, 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.

Ramirez and Xue Income Statement For the Year Ended December 31, 20Y2
Accounts PayableDepreciation expense - BuildingProfessional FeesSalary ExpenseSupplies ExpenseProfessional Fees		fill in the blank 2
Operating expenses:
Accumulated DepreciationProfessional FeesSalary ExpenseSalaries PayableSuppliesSalary Expense	fill in the blank 4
Accumulated DepreciationBuildingCashDepreciation Expense-BuildingProfessional FeesDepreciation Expense-Building	fill in the blank 6
Accounts PayableCamila Ramirez, CapitalBuildingOffice equipmentProperty Tax ExpenseProperty Tax Expense	fill in the blank 8
Accounts ReceivableCashHeating and Lighting ExpenseProfessional FeesSalaries PayableHeating and Lighting Expense	fill in the blank 10
Accumulated DepreciationBuildingLandSuppliesSupplies ExpenseSupplies Expense	fill in the blank 12
Accounts receivableAccumulated depreciationCashDepreciation Expense-office EquipmentOffice EquipmentDepreciation Expense-office Equipment	fill in the blank 14
Accounts PayableCashMiscellaneous ExpenseProfessional FeesSuppliesMiscellaneous Expense	fill in the blank 16
Total operating expenses		fill in the blank 17
Net IncomeNet LossNet Income		$fill in the blank 19

Ramirez and Xue Division of Income For the Year Ended December 31, 20Y2
	Camila Ramirez	Ping Xue	Total
Division of net income:
Salary allowance	fill in the blank 20	fill in the blank 21	fill in the blank 22
Interest allowance	fill in the blank 23	fill in the blank 24	fill in the blank 25
Remaining income	fill in the blank 26	fill in the blank 27	fill in the blank 28
Net income	fill in the blank 29	fill in the blank 30	fill in the blank 31

2. Prepare a statement of partnership equity for 20Y2. If any amounts are zero, enter in "0".

Ramirez and Xue Statement of Partnership Equity For the Year Ended December 31, 20Y2
	Camila Ramirez	Ping Xue	Total
Balances, January 1, 20Y2	fill in the blank 32	fill in the blank 33	fill in the blank 34
Capital additions	fill in the blank 35	fill in the blank 36	fill in the blank 37
Net income for the year	fill in the blank 38	fill in the blank 39	fill in the blank 40
Partner withdrawals	fill in the blank 41	fill in the blank 42	fill in the blank 43
Balances, December 31, 20Y2	$fill in the blank 44	$fill in the blank 45	$fill in the blank 46

3. Prepare a balance sheet as of the end of 20Y2.

Ramirez and Xue Balance Sheet December 31, 20Y2
Assets
Current assets:
Accounts PayableCamila Ramirez, CapitalCashPing Xue, CapitalSalaries PayableCash		fill in the blank 48
Accounts PayableAccounts ReceivableCamila Ramirez, CapitalPing Xue, CapitalSalaries PayableAccounts Receivable		fill in the blank 50
Accounts PayableHeating and lighting ExpenseSalaries PayableSuppliesSupplies ExpenseSupplies		fill in the blank 52
Total current assets			$fill in the blank 53
Property, plant, and equipment:
Accounts ReceivableCashLandProfessional FeesSalaries ExpenseLand		fill in the blank 55
Accounts PayableCashBuildingPing Xue, CapitalSupplies ExpenseBuilding	fill in the blank 57
Less Accounts ReceivableLess Accumulated DepreciationLess Camila Ramirez, DrawingLess CashLess Land	fill in the blank 59	fill in the blank 60
Accounts PayablePing Xue, CapitalMiscellaneous expenseOffice EquipmentProperty Tax ExpenseOffice Equipment	fill in the blank 62
Less Accounts PayableLess Accounts ReceivableLess Accumulated DepreciationLess CashLess Land	fill in the blank 64	fill in the blank 65
Total property, plant, and equip.			fill in the blank 66
Total assets			$fill in the blank 67
Liabilities
Current liabilities:
Accounts PayableAccounts ReceivableCamila Ramirez, CapitalCashOffice EquipmentAccounts Payable		fill in the blank 69
Accounts ReceivableCamila Ramirez, CapitalCashOffice EquipmentSalaries PayableSalaries Payable		fill in the blank 71
Total liabilities			fill in the blank 72
Partners' Equity
Accounts ReceivableCamila Ramirez, CapitalBuildingCashSalaries PayableCamila Ramirez, Capital		fill in the blank 74
Accounts ReceivableCashPing Xue, CapitalOffice EquipmentSalaries PayablePing Xue, Capital		fill in the blank 76
Total partners' equity			fill in the blank 77
Total liabilities and partners' equity			$fill in the blank 78