Question

Ramirez and Xue
Trial Balance
December 31, 20Y2
	Debit Balances		Credit Balances
Cash	46,200
Accounts Receivable	44,000
Supplies	1,700
Land	110,000
Building	120,100
Accumulated Depreciation—Building			68,800
Office Equipment	50,600
Accumulated Depreciation—Office Equipment			21,300
Accounts Payable			32,800
Salaries Payable			3,500
Camila Ramirez, Capital			110,000
Camila Ramirez, Drawing	49,500
Ping Xue, Capital			66,000
Ping Xue, Drawing	71,500
Professional Fees			399,600
Salary Expense	160,600
Depreciation Expense—Building	15,900
Property Tax Expense	9,900
Heating and Lighting Expense	7,900
Supplies Expense	5,700
Depreciation Expense—Office Equipment	5,000
Miscellaneous Expense	3,400
	702,000		702,000

The balance in Xue' capital account includes an additional investment of $11,000 made on May 5, 20Y2.

Required:

1. Prepare an income statement for 20Y2, indicating the division of net income. The partnership agreement provides for salary allowances of $44,000 to Ramirez and $54,000 to Xue, 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.

Ramirez and Xue Income Statement For the Year Ended December 31, 20Y2
Professional Fees
Operating expenses:
Salary Expense
Depreciation Expense-Building
Property Tax Expense
Heating and Lighting Expense
Supplies Expense
Depreciation Expense-office Equipment
Miscellaneous Expense
Total operating expenses
Net Income		$

Ramirez and Xue Division of Income For the Year Ended December 31, 20Y2
	Camila Ramirez	Ping Xue	Total
Division of net income:
Salary allowance
Interest allowance
Remaining income
Net income

2. Prepare a statement of partnership equity for 20Y2. If any amounts are zero, enter in "0".

Ramirez and Xue Statement of Partnership Equity For the Year Ended December 31, 20Y2
	Camila Ramirez	Ping Xue	Total
Balances, January 1, 20Y2
Capital additions
Net income for the year
Partner withdrawals
Balances, December 31, 20Y2	$	$	$

3. Prepare a balance sheet as of the end of 20Y2.

Ramirez and Xue Balance Sheet December 31, 20Y2
Assets
Current assets:
Cash
Accounts Receivable
Supplies
Total current assets			$
Property, plant, and equipment:
Land
Building
Less Accumulated Depreciation
Office Equipment
Less Accumulated Depreciation
Total property, plant, and equip.
Total assets			$
Liabilities
Current liabilities:
Accounts Payable
Salaries Payable
Total liabilities
Partners' Equity
Camila Ramirez, Capital
Ping Xue, Capital
Total partners' equity
Total liabilities and partners' equity			$

Answer 1

Part 1

Ramirez and Xue Income Statement For the Year Ended December 31, 20Y2
Professional Fees		399600
Operating expenses:
Salary Expense	160600
Depreciation Expense-Building	15900
Property Tax Expense	9900
Heating and Lighting Expense	7900
Supplies Expense	5700
Depreciation Expense-office Equipment	5000
Miscellaneous Expense	3400
Total operating expenses		208400
Net Income		$191200

Ramirez and Xue Division of Income For the Year Ended December 31, 20Y2
	Camila Ramirez	Ping Xue	Total
Division of net income:
Salary allowance	44000	54000	98000
Interest allowance	11000	5500	16500
Remaining income (191200-98000-16500)/2	38350	38350	76700
Net income	$93350	$97850	$191200

110000*10% = 11000

(66000-11000)*10% = 5500

Part 2

Ramirez and Xue Statement of Partnership Equity For the Year Ended December 31, 20Y2
	Camila Ramirez	Ping Xue	Total
Balances, January 1, 20Y2	110000	55000	159000
Capital additions		11000	11000
Net income for the year	93350	97850	191200
Partner withdrawals	(49500)	(71500)	(121000)
Balances, December 31, 20Y2	$153850	$92350	$246200

Part 3

Ramirez and Xue Balance Sheet December 31, 20Y2
Assets
Current assets:
Cash		46200
Accounts Receivable		44000
Supplies		1700
Total current assets			91900
Property, plant, and equipment:
Land		110000
Building	120100
Less Accumulated Depreciation	68800	51300
Office Equipment	50600
Less Accumulated Depreciation	21300	29300
Total property, plant, and equip.			190600
Total assets			$282500
Liabilities
Current liabilities:
Accounts Payable		32800
Salaries Payable		3500
Total liabilities			36300
Partners' Equity
Camila Ramirez, Capital		153850
Ping Xue, Capital		92350
Total partners' equity			246200
Total liabilities and partners' equity			$282500