You are given the following data for the partnership of J. Smith and S. Jones.
Smith is involved in the day-to-day operations of the business. Jones provides most of the cash contributions when needed. Smith pays himself $1,500 per month as a “salary” though the partners have agreed to share profits and losses equally. Jones contributed $20,000 capital during the year. The opening credit balance in the capital accounts was Smith $5,000 and Jones $40,000.
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Required: |
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1. |
Prepare an income statement for the year. |
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2. |
Prepare a statement of partners’ capital for the year in the following format and comment on the results: |
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3. |
Prepare a balance sheet at December 31, 2016. |
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4. |
Prepare closing entries at year-end. |
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