ACCOUNTING FOR PARTNERSHIP INCOME DISTRIBUTION

Tom and Jerry are partners and own the Tom & Jerry Document Center. Tom & Jerry Document Center provides document services as well as selling some of document peripherals & accessories needs.

They formed their partnership on January 1, 2016, with investments of $43,200 and $53,400. Jerry invested an additional amount of $20,000 in his capital on July 1, 2016.

Tom and Jerry share profits using a 8% of interest on the amount invested in each partner capital and dividing the remainder of net income acquired using a 3 : 2 fixed ratio since Tom has role as an active acquiring business partner.

The adjusted trial balance of Tom & Jerry Partnership is presented below (before closing entry):

Required :

a) Prepare a schedule showing the distribution of net income to the partners.

b) Prepare the statement of owners equity.

\\begin{tabular}{|l|r|r|} \\hline \\multicolumn{2}{|c|}{ Tom \\& Jerry Document Center } & in USD \\\\ \\hline \\multicolumn{2}{|c|}{ Adjusted Trial Balance } \\\\ \\hline \\multicolumn{2}{|c|}{ December 31, 2016 } \\\\ \\hline Cash & \\( 55,000.00 \\) & \\\\ \\hline Account Receivable & \\( 27,500.00 \\) & \\\\ \\hline Merchandise Inventory & \\( 33,500.00 \\) & \\\\ \\hline Supplies & \\( 14,000.00 \\) & \\\\ \\hline Equipment & \\( 35,000.00 \\) & \\\\ \\hline Accumulated Depreciation - Equipment & & \\( 17,500.00 \\) \\\\ \\hline Account Payable & & \\( 12,200.00 \\) \\\\ \\hline Tom, Drawing & \\( 14,400.00 \\) & \\\\ \\hline Jerry, Drawing & \\( 6,900.00 \\) & \\\\ \\hline Tom, Capital & & \\( 43,200.00 \\) \\\\ \\hline Jerry, Capital & & \\( 73,400.00 \\) \\\\ \\hline Sales Revenue & \\( 76,500.00 \\) & \\\\ \\hline Operating Expenses & \\( 20,000.00 \\) & \\\\ \\hline Cost of Goods Solds & \\( \\mathbf{2 8 2 , 8 0 0 . 0 0} \\) & \\( \\mathbf{2 8 2 , 8 0 0 . 0 0} \\) \\\\ \\hline \\end{tabular}