AFTER LIABILITES ITS

-ARNOLD CAPITAL:

-JOLLY CAPITAL:

-TOTAL LIABILITIES AND CAPITAL ACCOUNTS:

*PLEASE LOOK OVER THE ONES THAT I HAVE FILLED IN AS I AM NOT SURE THEY ARE CORRECT. THANKS!

At the beginning of the current year, Arnold and Jolly formed the AJ Partnership by transferring cash and property to the partnership in exchange for a partnership interest, with each having a 50% interest. Specifically, Arnold transferred property having a $80,000FMV, a $20,000 adjusted basis, and subject to a $13,000 liability, which the partnership assumed. Jolly contributed $20,000 cash to the partnership. The partnership also borrowed $35,000 from the bank to use in its operations. All liabilities are recourse for which the partners have an equal economic risk of loss. During the current year, the partnership earned $25,000 of net ordinary income and reinvested this amount in new property. Requirement c. For the partnership, prepare a tax and book balance sheet at the end of the current year. Begin by preparing the tax balance sheet