Question

The capital accounts of Heidi and Moss have balances of $180,000 and $130,000, respectively, on January 1, the beginning of the current fiscal year. On April 10, Heidi invested an additional $16,000. During the year, Heidi and Moss withdrew $80,000 and $64,000, respectively. Revenues were $1,080,000 and expenses were $840,000 for the year. The articles of partnership make no reference to the division of net income.

Required: Prepare a statement of partners’ equity for the partnership of Heidi and Moss

Answer 1

Answer:

Statement of Partners Equity

For the year ended on December 31, XXXX

	Heidi	Moss
Capital balance, January 1	$180,000	$130,000
Capital introduced during the year	$16,000	$0
withdrawals made during the year	($80,000)	($64,000)
Net Income	$120,000	$120,000
Capital balance, December 31	$236,000	$186,000

Note-1: As the articles of partnership make no reference to the division of net income & hence net income is divided between them equally.

Note-2: calculation of Net Income

Net Income = Revenue - Expenses

   = $1,080,000 - $840,000

= $240,000