BASIC FINANCIAL STATEMENT FORMAT – PARTNERSHIP © …

BASIC FINANCIAL STATEMENT FORMAT ? PARTNERSHIP ? Written by Professor Gregory M. Burbage, MBA, CPA, CMA, CFM Please observe all copyright laws

stmts3.doc

Note: When preparing financial statements by hand the Income Statement would usually be prepared first because the net income or loss becomes part of the Statement of Partners' Capital. The Statement of Partners' Capital is usually prepared second because the ending partners' capital balances become part of the Balance Sheet.

Note: Corporations are subject to income taxes but sole proprietorships and partnerships are not. Otherwise the income statements of each are identical.

Income Statement (single-step format):

HANSON RETAIL FOOD STORE Income Statement

Year Ended December 31, 2006

Net Sales Rent revenue Interest revenue

Total Revenue

$262,000 6,900 1,400

-------270,300

Expenses: Cost of Goods Sold Salaries and wages Advertising Freight out Depreciation Taxes and licenses Rent Interest expense Loss on sale of assets Property taxes

Total expense

Net Income (loss)

$159,000 45,000 12,400 4,000 5,000 3,000 6,300 350 250 2,000

--------

237,300 -------$ 33,000 ========

Note: Owner's equity statements of corporations are called Statement of Retained Earnings, those of sole proprietorships are called Statement of Capital and those of partnerships are called Statement of Partners' Capital.

Statement of Partners' Capital:

HANSEN RETAIL FOOD STORE Statement of Partner's Capital Year Ended December 31, 2005

Beginning balance Net income (loss)

Withdrawals Ending balance

John Soo $ 24,000

16,500 40,500

500 $ 40,000

===========

Mary Doe $ 33,000

16,500 49,500

1,500 $ 48,000

===========

Totals $ 57,000

33,000 90,000

2,000 $ 88,000

===========

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Note: Balance Sheets of corporations have a Shareholders' Equity section whereas sole proprietorships have an Owner's Capital section and partnerships have a Partners' Capital section. Otherwise the Balance Sheets would be identical.

Balance Sheet:

HANSEN RETAIL FOOD STORE Balance Sheet

December 31, 2006

ASSETS Current Assets:

Cash Short-term investments/marketable securities Accounts receivable, net Inventory Prepaid rent Office supplies on hand Total current assets

Long-Lived Assets: Long-term investments Land Building Machinery & equipment Less accumulated depreciation Patents

Total long-lived assets Total Assets

Current Liabilities: Accounts payable Notes payable Interest payable Wages payable Total current liabilities

LIABILITIES

Long-Term Liabilities: Mortgage payable Bonds payable Total long-term liabilities

Total Liabilities

PARTNERS' CAPITAL

John Soo, Capital Mary Doe, Captial Total Partners' Capital Total Liabilities and Owner's Equity

$ 3,000 6,000 5,000

10,000 2,000 1,000

27,000

$ 10,000 35,000 86,000 50,000

( 23,000) 4,000

162,000 $189,000 ========

$ 4,200 15,000 1,000 800 21,000

$ 30,000 50,000

80,000 101,000

40,000 48,000

88,000 $189,000 ========

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