Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 43

Financial statements for partnership
The ledger of Tyler Lambert and Jayla Yost, attorneys-at-law, contains the following accounts and balances after adjustments have been recorded on December 31, 2016:

The balance in Yost's capital account includes an additional investment of $10,000 made on April 10, 2016.
Instructions
1. Prepare an income statement for 2016, indicating the division of net income. The partnership agreement provides for salary allowances of $45,000 to Lambert and $54,700 to Yost, 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.
2. Prepare a statement of partnership equity for 2016.
3. Prepare a balance sheet as of the end of 2016.