ADDITIONAL INFORMATION

The partnership provided the following notes:

$$ The Investments account consists of marketable securities of U$.$S$.$ corporations and U$.$S$.$ Treasury Bonds. All of

the dividends are considered qualified dividends.

$$ Equipment was sold May $12,2022$ for $$9,800.$ It was purchased new on May $1,2021$ for $$10,000$ and its basis

when sold was $$6,300.$

$$ New equipment was purchased March $1,2022$ with $$5,000$ cash and a $$35,000$ three$-$year recourse note

payable. The first note payable is March $1,2023.($Note: the correct amount of tax depreciation is included in

the depreciation expense account on the trial balance.$)$

$$ Notes Payable are long$-$term except for $$20,000$ of the recourse notes to be paid next year. All liabilities were

created by the partnership.

$$ The partners$$ drawing accounts record cash distributions made to partners throughout the year.

$$ Compensation is composed of guaranteed payments of $$30,000$ each to Gary and Donna and $$50,000$ to

unrelated employees.

$$ Health insurance premiums paid were for the unrelated employees.

FINANCIAL INFORMATION

The December $31,2021$ Balance Sheet and December $31,2022$ Trial Balance $($both prepared for tax purposes$)$ for the

partnership are given below.

K & K GENERAL PARTNERSHIP

BALANCE SHEET TRIAL BALANCE

$12/31/202112/31/2022$

Debit Credit Debit Credit

Cash $ $12,000$ $ $22,000$

Investments $14,00014,000$

Equipment $150,000190,000$

Accumulated Depreciation $ $38,000$ $ $63,500$

Recourse Notes Payable $58,00087,200$

Nonrecourse Notes Payable $36,00030,000$

Gary, Capital $28,00028,000$

Gary, Drawing $25,440$

Donna, Capital $16,00016,000$

Donna, Drawing $16,960$

Revenues $235,000$

Dividend Income $1,000$

Interest Income $400$

$1245$ Gain $($depreciation recapture$)3,500$

Compensation $110,000$

Rent Expense $12,000$

Interest Expense $16,600$

Tax Expense $($property & payroll$)13,800$

Repair Expense $5,800$

MACRS Depreciation $29,200$

Health Insurance Expense $1,600$

Property Insurance Expense $1,500$

Office Supplies Expense $3,000$

Utilities Expense $2,200$

Charitable Contribution $500$

Total $ $176,000$ $ $176,000$ $ $464,600$ $ $464,600$