Question

For Sunland Co., beginning capital balances on January 1, 2020, are Nancy Payne $18,900 and Ann Dody $24,000. During the year, drawings were Payne $8,700 and Dody $5,200. Net income was $28,700, and the partners share income equally.

Show the partners' capital statement for the year and show the owners' equity section of the balance sheet at December 31, 2020.

Answer 1

Answer and Explanation:

The preparation of the partner capital statement and the owner equity section is presented below:

Partner capital statement

Particulars N. Payne Ann Dody Total

Beginning

balance $18,900 $24,000 $42,900

Less: Drawings -$8,700 -$5,200 -$13,900

Balance left $10,200 $18,800 $29,000

Add: Net income

share 50% 50% $14,350 $14,350 $28,700

ending balance $24,550 $33,150 $57,700

Now the balance sheet is

Sunland Co,

Partial balance sheet

Dec 31,2020

Owner capital

Partner capital balance $29,000

Add: Net income $28,700

Total owner equity $57,700