1
22
Partnerships
A review of the
Equity section of
the balance sheet
will indicate the
partnership form of
business
organization
Learning Objectives
1. Identify characteristics of a partnership
2. Account for organization of a
partnership
3. Account for income allocation among
partners
4. Account for the admission and
retirement of partners
BALANCE SHEET
Assets
Liabilities
INCOME STATEMENT
Revenue
5. Account for the liquidation of
partnerships
6. Analysis: Compute and explain return
on partners’ equity
Expenses
Equity
Profit
Debit
Credit
or
Loss
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Objective 22.1:
Identify characteristics
of a partnership
Characteristics or partnerships
1.
2.
3.
4.
5.
6.
7.
O22.1
Voluntary association
Mutual agency
Limited life
Unlimited liability
Co-ownership of property
Income taxes
Partnership agreement
Partner?
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Partnership characteristics
Voluntary Association
•Agreements to form a partnership are
voluntary
They can be dissolved at will (existing
liabilities will remain however)

They can be formed by an oral
agreement (handshake) or a written
agreement

O22.1
Fetch!!
(If you
want to)
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Partnership characteristics
Limited Life (generally)
Partnerships terminate with the death or
bankruptcy of any partner

Partnerships terminate with:
The withdrawal of an existing partner or
The admission of a new partner Playing



dead
doesn’t
count. We’re
still
partners…
O22.1
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Partnership characteristics
Mutual Agency
As an agent, each and every partner can bind the
partnership within the scope of the partnership
business
Partners, by agreement, can limit the scope of
partners acting for the partnership

Outsiders, unless they have knowledge of a
partner’s limitation to bind the partnership, can
You said we
legally assume no limitations exist
would mow the

lawn?? You can’t
push the
mower...
O22.1
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Partnership characteristics
Unlimited Liability
Each partner is fully liable for all the
debts of the partnership

Partners are personally liable for
debts of the partnership

We owe what ??
How could you
have possibly
eaten that much
?
O22.1
©CourseCollege.com
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Partnership characteristics
Co-ownership of property
Partnership property is jointly owned by
the partners regardless of which partner
invests the property

Look, we own
“your” doghouse
together. OK ?
Don’t be so
territorial.
O22.1
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Partnership characteristics
Income tax
Partnerships do not pay taxes on
income

Individual partners are responsible for
income taxes on their allocation of
partnership income

Partner
Schmartner
You pay your
own taxes. . .
O22.1
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Partnership characteristics
Partnership Agreement
Most partnerships use a written
partnership agreement

In the absence of a written
agreement, the Uniform Partnership
Act rules prevail in an agreement
dispute

I know its
embarrassing
but a paw print
is all you can
sign with. . .
O22.1
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Partnership characteristics
Partnership Advantages
Can raise more capital and expertise than
proprietorships

O22.1

Less expensive to form than corporations

Partnership income is not taxed separately

Can be formed very quickly
Remind me
again of the
expertise you
were bringing to
this deal . . .
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Partnership characteristics
Partnership Disadvantages
•Agreements can become difficult to negotiate
Mutual agency and unlimited liability create
personal obligations and exposure for
individual partners

Success often dependent on
mutual trust between partners

O22.1
For you, I’m a
partner.
For me, you’re a
burden. . .
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Partnership characteristics
Partnership Agreement
The nature of the partnership business, its name
and location
The names, initial capital investments and duties
of each partner
Method of allocating (sharing) profits and losses
among partners
Agreements on:
Withdrawals of assets
Admission of new partners
Withdrawals of partners
So?? You still get
2% of profits
Liquidation of the partnership
after I get my
$50,000 salary
Dispute resolution procedures
allowance. . .
O22.1
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Types of Partnerships
General partnerships
are the traditional and most
common form of partnership. The preceding characteristics
apply to all general partners.
Limited partnerships
have two
types of partners, general and limited. The
general partner is responsible for
management of the business and has
unlimited liability for partnership debts.
Limited partners have no management
duties or authority. Their liability to
partnership debts is limited to the amount
of their partnership investment.
O22.1
You’re limited
only your ability.
You’re still
responsible
buddy. . .
©CourseCollege.com
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Objective 22.2: Account for
organization of a partnership
Basic accounting for partnerships is
similar to that of proprietorships. The
exceptions are those transactions
that involve the partner’s equity
accounts
BALANCE SHEET
Assets
Liabilities
INCOME STATEMENT
Revenue
The Equity
section will tell
you if the firm is
a partnership
Expenses
Equity
O22.2
Debit
Profit
Credit
or
Loss
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Account for organization of a partnership
Partner’s equity accounts must be used for:
Initial and subsequent equity investments
Distribution of profits and losses to
individual partners
Withdrawal of assets by individual partners
Dissolutions and liquidation of the
partnership
O22.2
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Account for organization of a partnership
Partnership accounting requires the
following:
A separate equity account for each partner
A separate withdrawal account for each
partner
Allocation of profits and losses among
partners according to a partnership
agreement
O22.2
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Account for organization of a partnership
Assume J. Ross and T. Smith form a
partnership with equal cash equity
investments of $25,000
Separate
equity
account for
each partner
BALANCE SHEET
Assets
Liabilities
INCOME STATEMENT
Revenue
Expenses
J. Ross, Capital
25,000
T. Smith, Capital
25,000
Total equity in the partnership is
now:
J. Ross, Capital
$25,000
T. Smith Capital
$25,000
Total Equity
$50,000
Equity
Profit
Debit
Credit
or
Loss
O22.2
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Account for organization of a partnership
J. Ross withdraws $1,000 and
T. Smith withdraws $2,000
Separate
withdrawal
account for
each partner
BALANCE SHEET
Assets
Liabilities
INCOME STATEMENT
J. Ross, Withdrawls
1,000
T. Smith, Withdrawals
2,000
Total equity in the partnership is
now:
Revenue
Expenses
Equity
J. Ross, Capital
Less withdrawals
T. Smith Capital
Less withdrawals
$25,000
(1,000)
$25,000
(2,000)
Total Equity
$47,000
Profit
Debit
Credit
or
Loss
O22.2
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Account for organization of a partnership
J. Ross and T. Smith have agreed to
share profits 50-50. First year profits
are $10,000
Allocation of
profits and
losses per
agreement
BALANCE SHEET
Assets
Liabilities
INCOME STATEMENT
Revenue
Expenses
J. Ross, Capital
25,000
5,000
Balance
30,000
T. Smith, Capital
25,000
5,000
Balance
30,000
Total equity in the partnership is now:
J. Ross, Capital
$30,000
Less J. Ross, Withdrawals
(1,000)
T. Smith Capital
$30,000
Less T. Smith Withdrawals
(2,000)
Equity
Total Equity
$57,000
Profit
Debit
Credit
or
Loss
O22.2
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Account for organization of a partnership
Accounting for the start-up of a
partnership is similar to that of a
proprietorship. Partners invest both
assets and liabilities.
ASSETS
O22.2
With agreement
by partners, BOTH
can be invested
into the
partnerships
LIABILITIES
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Account for organization of a partnership
T. Will and R. Star form a partnership.
T. Will invests $90,000 cash.
R. Star invests $10,000 and a commercial
building and land that cost $125,000.
The building and land recently appraised
for $300,000, (land at $100,000 and
building at $200,000).
R. Star has a $150,000 loan on the real
estate which the partnership agrees to
assume.
O22.2
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Account for organization of a partnership
GENERAL JOURNAL
Date
Description
PR
Page 1
Debit
6/30/10 ¢Cash
100
100,000
¢Land
175
100,000
¢Building
165
200,000
Credit
¢Long Term Debt -Real estate
265
150,000
¢R. Star, Capital
310
160,000
¢T. Will, Capital
320
90,000
Record initial partner investments
90,000 Will; 10,000 Star
Assumption of Star’s
real estate debt
O22.2
Star: 10,000 cash; 150,000
real estate equity
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Objective 22.3:
Account for income
allocation among partners
Various method of income (and loss) sharing
are used by partners. Some examples include
allocation by:
Percentage
Capital balances
Both percentage and capital balances
Combination of service, capital balances and
percentage
O22.3
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Partner income allocation -percentage
Tina Boss and Mary Wisk form a partnership
and agree that profits and losses should be
shared with 1/3 to Tina and 2/3 to Mary.
The recent year end resulted in a loss of
$60,000.
1/3 for
me
Tina
GENERAL JOURNAL
Date
Description
2/3 for
me
Mary
Page 14
PR
Debit
Credit
Closing Entries
12/31/10 ¢Tina Boss, Capital
O22.3
310
20,000
¢Mary Wisk, Capital
320
40,000
Income Summary
399
60,000
2/3 x 60,000 = 40,000
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Partner income allocation –capital balances
Ryo Tan, Mike West and
Total capital =
Han Lee form a new
Ryo’s
$30,000
Mike’s
$50,000
partnership and agree to
Han’s
$20,000
allocate income and
$100,000
losses based on their end
of the year capital
balances. The first year
Ryo’s share 30/100 x $50,000 = $15,000
net income is $50,000.
Mike’s share 50/100 x $50,000 = $25,000
Han’s share 20/100 x $50,000 = $10,000
GENERAL JOURNAL
Date
Description
Page 21
PR
Debit
Credit
Closing Entries
12/31/10 Income Summary
O22.3
399
50,000
¢Ryo Tan, Capital
310
15,000
¢Mike West, Capital
320
25,000
¢Han Lee, Capital
330
10,000
©CourseCollege.com
Partner income allocation -capital balances & %
26
Ryo
Mike
Han
Total
The second year,
Ending Capital
45,000
75,000
30,000 150,000
Ryo, Mike & Han
% Capital
30%
50%
20%
100%
decide to allocate
1st 60,000
18,000
30,000
12,000
60,000
income based on
Remaining
10,000
10,000
10,000
30,000
end-of-year capital Totals
28,000
40,000
22,000
90,000
balances for the
first $60,000 with
20% x 60,000 = 12,000
any remainder
shared equally. Net
GENERAL JOURNAL
Page 21
income for the year
wasDate
$90,000.
Debit
Credit
Description
PR
Closing Entries
12/31/11 Income Summary
O22.3
399
90,000
¢Ryo Tan, Capital
310
28,000
¢Mike West, Capital
320
40,000
¢Han Lee, Capital
330
22,000
©CourseCollege.com
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Partner income allocation –service, capital & %
The end of the third year Ryo, Mike and Han decide to change their
income allocation agreement again. The plan is as follows:
First, a service (salary allowance) allocation, Ryo $40,000; Mike
$10,000; Han $80,000
Second, 10% of end-of-year capital balances
Third, an remaining balance (positive or negative) to be shared
equally.Total income the third year was $175,000.
Ryo
Total Income
Ending Capital
1) Service allowance
2) 10% of capital
3) Remainder
shared equally
Totals
O22.3
Mike
Han
60,000
40,000
6,000
50,000
10,000
5,000
25,000
80,000
2,500
10,500
56,500
10,500
25,500
10,500
93,000
175,000 – 130,000 – 13,500 =
31,500
Total
175,000
130,000
13,500
31,500
31,500
175,000
©CourseCollege.com
Partner income allocation –service, capital & %
28
In the fourth year the Ryo, Mike and Han partnership
earned $125,000. Notice the ($7,500) allocated to each
in step #3. When income is adequate, a positive equal
distribution will result, however, when income is
inadequate, all partners share, per their agreement, in
the shortfall.
Total Income
Ending Capital
1) Service allowance
2) 10% of capital
3) Remainder
shared equally
Totals
O22.3
Ryo
Mike
Han
75,000
40,000
7,500
60,000
10,000
6,000
40,000
80,000
4,000
(7,500)
40,000
(7,500)
8,500
(7,500)
76,500
125,000 – 130,000 – 17,500 =
(22,500)
Total
125,000
130,000
17,500
(22,500)
(22,500)
125,000
©CourseCollege.com
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Objective 22.4:
Account for the
admission and retirement of partners
Admit partners
(new partnership results):
Personal transaction*

At book, below book or above book value
Partnership transaction

At book, below book or above book value
*In a general partnership, all partners must agree to allow a new
partner into the firm. However, the financial interest in the
partnership can often be sold separately in a personal transaction.
No change to the partnership accounts would result.
O22.4
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Admit partner –personal transaction*
In the Ryo, Mike, Han partnership, Ryo sells his
partnership interest to Fred for $125,000. Mike and
Han agree to Fred Small as a new partner. Ryo’s
capital account totals $115,000 at the time of the
sale. Fred pays Ryo personally, the partnership
receives no cash. The partnership simply records the
following:
GENERAL JOURNAL
Date
Description
1/31/12 ¢Ryo Tan, Capital
¢Fred Small, Capital
Page 37
PR
310
340
Debit
Credit
115,000
115,000
*Acknowledged and accepted by the partnership
O22.4
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Admit partner –partnership transaction at book value
Partners Tina and Mary agree to admit Kim Chu as a 20%
partner for a cash investment of $25,000.
Beginning capital
Projected capital
Tina
60,000
Beginning
Mary
40,000
New partner
Total
100,000
Total
100,000
25,000
125,000
New partner’s capital
Total 125,000 x 20% = 25,000
GENERAL
JOURNAL
Date
Description
12/31/10 ¢Cash
¢Kim Chu, Capital
O22.4
PR
100
330
Page 14
Debit
Credit
25,000
25,000
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Admit partner –partnership transaction above book value
Partners Tina and Mary agree to admit Kim Chu as a 20%
partner for a cash investment of $31,000. Tina will receive
1/3 and Mary 2/3 of any bonus or deficiency.
Beginning capital
Projected capital
Tina
60,000
Beginning
Mary
40,000
New partner
Total
100,000
Total
100,000
31,000
131,000
New
partner’sJOURNAL
capital
GENERAL
Total
131,000 x 20% = 26,200
Description
PR
Date
12/31/10 ¢Cash
¢Tina Boss, Capital
¢Mary Wisk, Capital
¢Kim Chu, Capital
O22.4
Page 14
100
310
Bonus
320
330
Debit
Credit
31,000
1,600
3,200
26,200
©CourseCollege.com
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Admit partner –partnership transaction below book value
Partners Tina and Mary agree to admit Kim Chu as a 20%
partner for a cash investment of $22,000. Tina will receive
1/3 and Mary 2/3 of any bonus or deficiency.
Beginning capital
Projected capital
Tina
60,000
Beginning
Mary
40,000
New partner
Total
100,000
100,000
22,000
Total
122,000
JOURNAL
NewGENERAL
partner’s capital
Date
PR
Total Description
122,000 x 20% = 24,400
12/31/10 ¢Cash
O22.4
Page 14
Debit
100
22,000
¢Tina Boss, Capital
310
800
¢Mary Wisk, Capital
320
1,600
¢Kim Chu, Capital
330
24,400 - 22,000 = 2,400 x 1/3 = 800
Credit
24,400
©CourseCollege.com
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Partnership transaction partner withdraws

Partner may withdraw voluntarily or due to
natural death

The original partnership ends upon withdrawal

A partner may withdraw at book, below book or
above book value

Partnership agreement may contain withdrawal
agreement or conditions

In general, remaining partners usually must
agree on how the withdrawing partner’s equity
is dealt with
O22.4
©CourseCollege.com
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Partner withdraws at book value
Consider HMS partnership with three partners Hiko,
Millie and Sam. The partnership has been successful
and current partner equity account balances are
Hiko $250,000; Millie $175,000; and Sam $185,000.
All profits and losses are shared equally. Sam has
asked to withdraw from the partnership at book
value. His partners agree.
GENERAL JOURNAL
Date
Description
Page 167
PR
10/31/11 ¢Sam Wells, Capital
330
¢Cash
100
O22.4
Debit
Credit
185,000
185,000
©CourseCollege.com
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Partner withdraws above book value
Consider the same HMS partnership in a different
scenario. Current partner equity account balances are
Hiko $250,000; Millie $175,000; and Sam $185,000.
All profits and losses are shared equally. Sam agrees
to leave for $215,000 cash. His partners agree.
GENERAL JOURNAL
Date
Description
10/31/11 ¢Sam Wells, Capital
PR
Debit
330
185,000
¢Hiko Su, Capital
320
15,000
¢Millie Sharov, Capital
310
15,000
¢Cash
O22.4
Page 167
100
Credit
215,000
Amount necessary to balance is 215,000 – 185,000
= 30,000/2 = 15,000 debit (reduction) to each
remaining partner’s equity account
©CourseCollege.com
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Partner withdraws below book value
Consider the same HMS partnership in a different
scenario. Current partner equity account balances are
Hiko $250,000; Millie $175,000; and Sam $185,000.
All profits and losses are shared equally. Sam agrees
to leave for $145,000 cash. His partners agree.
GENERAL JOURNAL
Date
Description
10/31/11 ¢Sam Wells, Capital
O22.4
Page 167
PR
330
Debit
Credit
185,000
¢Hiko Su, Capital
320
20,000
¢Millie Sharov, Capital
310
20,000
¢Cash
100
145,000
Amount necessary to balance is 185,000 – 145,000
= 40,000/2 = 20,000 credit (increase) to each
remaining partner’s equity account
©CourseCollege.com
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Objective 22.5:
Account for liquidation
of partnerships
Liquidation risk: cash received for the rapid
sale of assets may result in losses -less cash
received than the book values recorded for the
assets sold
Liquidation process:
1. Complete the liquidation sale of non-cash
assets
2. Allocate gains or losses from liquidation to
partners according to their allocation
agreement
3. Pay all creditors
4. Disburse remaining cash to partners
according to their capital balances
O22.5
©CourseCollege.com
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Liquidation of a partnership at book value
Balance Sheet -Ryo, Mike & Han Partnership
As of 12/31/12
Assets
Cash
Accounts receivable
Inventory
Prop, plant, equip
Total assets
5,000
135,000
250,000
330,000
720,000
12/31/12 ¢Ryo Tan, Capital
250,000
Long term debt
240,000
Total liabilities
490,000
Equity
Ryo Tan, Capital
Mike West, Capital
Han Lee, Capital
Total equity
75,000
100,000
55,000
230,000
310
75,000
¢Mike West, Capital
320
100,000
¢Han Lee, Capital
330
55,000
¢Cash
O22.5
Liabilities
Accounts Payable
100
Final disbursement when all non-cash assets
are sold for book value
Ryo
Mike
Han
230,000
©CourseCollege.com
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Liquidation of a partnership below book value
Balance Sheet -Ryo, Mike & Han Partnership
As of 12/31/12
Assets
Cash
Accounts receivable
Inventory
Prop, plant, equip
To t al cash rec'd
Total assets
$ rec'd
5,000
110,000
200,000
5,000
135,000
250,000
315,000
330,000
630,000
720,000
Liabilities
Accounts Payable
250,000
Long term debt
240,000
Total liabilities
490,000
Equity
Ryo Tan, Capital
Mike West, Capital
Han Lee, Capital
Total equity
75,000
100,000
55,000
230,000
Cash received is less than
book values creating a loss
O22.5
©CourseCollege.com
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Liquidation of a partnership below book value
Balance Sheet -Ryo, Mike & Han Partnership
As of 12/31/12
Assets
Cash
Accounts receivable
Inventory
Prop, plant, equip
To t al cash rec'd
Total assets
The loss is
allocated based
on partnership
agreement
O22.5
$ rec'd
5,000
110,000
200,000
5,000
135,000
250,000
315,000
330,000
630,000
720,000
Liabilities
Accounts Payable
250,000
Long term debt
240,000
Total liabilities
490,000
Equity
Ryo Tan, Capital
Mike West, Capital
Han Lee, Capital
Total equity
Begining Capital
Liquidation
Loss
Balance
Remaining
75,000
100,000
55,000
230,000
Ryo
75,000
Mike
100,000
Han
55,000
(30,000)
(30,000)
(30,000)
45,000
70,000
25,000
©CourseCollege.com
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Liquidation of a partnership below book value
GENERAL JOURNAL
Date
Description
Page 21
PR
Debit
Credit
Closing Entries
12/31/12 ¢Cash Existing cash balance = $5,000
100
625,000
¢Ryo Tan, Capital
310
30,000
¢Mike West, Capital
320
30,000
¢Han Lee, Capital
330
30,000
¢Accounts Receivable
125
135,000
¢Inventory
145
250,000
¢Property, Plant & Equipment
165
330,000
This entry records the
cash received for the
sale of non-cash
assets
O22.5
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Liquidation of a partnership below book value
GENERAL JOURNAL
Date
Description
Page 21
PR
Debit
Credit
Closing Entries
12/31/12 ¢Accounts Payable
220
250,000
¢Long Term Debt
260
240,000
¢Ryo Tan, Capital
310
45,000
¢Mike West, Capital
320
70,000
¢Han Lee, Capital
330
25,000
¢Cash
100
630,000
This entry records the
final cash disbursement
to creditors and
partners
O22.5
©CourseCollege.com
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Liquidation of a partnership below book value
GENERAL JOURNAL
Date
Description
Page 21
PR
Debit
Credit
Closing Entries
12/31/12 ¢Accounts Payable
220
250,000
¢Long Term Debt
260
240,000
¢Ryo Tan, Capital
310
45,000
¢Mike West, Capital
320
70,000
¢Han Lee, Capital
330
25,000
¢Cash
100
630,000
Beginning equity balance for Ryo was
75,000 – 30,000 loss on liquidation = 45,000
remaining
O22.5
©CourseCollege.com
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Liquidation of a partnership above book value
Balance Sheet -Ryo, Mike & Han Partnership
As of 12/31/12
Assets
Cash
Accounts receivable
Inventory
Prop, plant, equip
To t al cash rec'd
Total assets
$ rec'd
5,000
110,000
200,000
5,000
135,000
250,000
450,000
330,000
765,000
720,000
Liabilities
Accounts Payable
250,000
Long term debt
240,000
Total liabilities
490,000
Equity
Ryo Tan, Capital
Mike West, Capital
Han Lee, Capital
Total equity
75,000
100,000
55,000
230,000
Cash received is more than
book values creating a gain
O22.5
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Liquidation of a partnership above book value
Balance Sheet -Ryo, Mike & Han Partnership
As of 12/31/12
Assets
Cash
Accounts receivable
Inventory
Prop, plant, equip
To t al cash rec'd
Total assets
The gain is
allocated based
on partnership
agreement
O22.5
$ rec'd
5,000
110,000
200,000
5,000
135,000
250,000
450,000
330,000
765,000
720,000
Liabilities
Accounts Payable
250,000
Long term debt
240,000
Total liabilities
490,000
Equity
Ryo Tan, Capital
Mike West, Capital
Han Lee, Capital
Total equity
Begining Capital
Liquidation
Gain
Ending
Balance
75,000
100,000
55,000
230,000
Ryo
75,000
Mike
100,000
Han
55,000
15,000
15,000
15,000
90,000
115,000
70,000
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Liquidation of a partnership above book value
GENERAL JOURNAL
Date
Description
Page 21
PR
Debit
100
760,000
Credit
Closing Entries
12/31/12 ¢Cash Existing cash balance = $5,000
¢Ryo Tan, Capital
310
15,000
¢Mike West, Capital
320
15,000
¢Han Lee, Capital
330
15,000
¢Accounts Receivable
125
135,000
¢Inventory
145
250,000
¢Property, Plant & Equipment
165
330,000
This entry records the
cash received for the
sale of non-cash
assets
O22.5
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Liquidation of a partnership above book value
GENERAL JOURNAL
Date
Description
Page 21
PR
Debit
Credit
Closing Entries
12/31/12 ¢Accounts Payable
220
250,000
¢Long Term Debt
260
240,000
¢Ryo Tan, Capital
310
90,000
¢Mike West, Capital
320
115,000
¢Han Lee, Capital
330
70,000
¢Cash
100
765,000
This entry records the
final cash disbursement
to creditors and
partners
O22.5
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49
Liquidation of a partnership above book value
GENERAL JOURNAL
Date
Description
Page 21
PR
Debit
Credit
Closing Entries
12/31/12 ¢Accounts Payable
220
250,000
¢Long Term Debt
260
240,000
¢Ryo Tan, Capital
310
90,000
¢Mike West, Capital
320
115,000
¢Han Lee, Capital
330
70,000
¢Cash
100
765,000
Beginning equity balance for Ryo was
75,000 + 15,000 gain on liquidation = 90,000
remaining
O22.5
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50
Objective 22.6:
Analysis: Compute and
explain partner return on equity
Average partner equity can be estimated by adding
the beginning partner equity to the ending partner
equity and dividing by 2
Partner
return on
equity
=
Partner net income
Average partner equity
This would be computed for
each partner in the
partnership
O22.6
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Price Earnings Ratio
Price = the market price per share
Earnings = the basic earnings per share
PE ratio
=
Market price per share
Basic earnings per share
The higher the ratio, the more
investors are paying for the
annual earnings per share
reported by the firm
O22.6
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Example
Statement of Changes in Partner Equity
VCW Partnership
For the year ending 12/31/12
Partners
J.Vasquez R .Cruz
L.Wilson Total
Partner Equity Beginning
Less: Partner Withdrawals
Partner Equity Ending
(prior to income allocation)
(50,000)
240,000
(30,000)
60,000
0
600,000
(80,000)
250,000
210,000
60,000
520,000
40,000
35,000
5,000
80,000
Partner Equity Ending
290,000
245,000
65,000
600,000
Average Partner Equity
275,000
225,000
60,000
560,000
Add: Income allocated for the year
Partner R eturn on Equity
(Partner Income/Avg Part. Equity)
O22.6
300,000
14.5%
15.6%
8.3%
14.3%
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End Unit 14
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