Question

1. John and Ted are equal partners in and aircraft salvage business operating as a general partnership. The balance sheet for December 31, 2018 is as follows: John & Ted's Aircraft Salvage Partnership Balance Sheet as of 12/31/18 Assets: Cash Inventory $ 60,000 $ 30,000 Total Assets $ 90,000 Liabilities Citi-Bank Loan $50,000 Partner's Equity John Ted $ 30,000 $ 10,000 Total Liabilities and Partner's Equity $ 90,000 During 2019 the partnership had the following transactions: A John and Ted each drew $10,000 out of the partnership. B The partnership paid $30,000 of principal and $2,000 interest on the Citi-Bank Loan. The sole business conducted during 2018 was the sale of $ 10,000 of inventory for $ 42.000. D The partnership purchased a truck at the end of the year for $10,000. Please prepare a balance sheet for December 31, 2019 on the next page:

Please show debits/credits

Answer 1

Considering the facts of the question given, Balance Sheet of John & Ted's Aircraft Salvaga Partnership as on 31st December 2019 is provided in the answer attached below along with the Working Notes and the references to the working notes.

Facts of the Question Amount Assets Cash Inventory Liabilites Citi Bank Loan Amount 50,000 60,000 30,000 Equity John Ted Amount 30,000 10,000 Answer to the question along with working notes are provided below: Note: WN Refers to Working Note Answer: Balance Sheet of John & Ted's Aircraft Salvaga Partnership, as on 31st December 2019 Amount A ssets Amount Liabilities Capital Account: (WN - 1) John - 20,000 Ted - 0 Profit (WN - 2) Citi Bank Loan WN-5) Total 20,000 Cash (WN - 3) 30,000 Inventory (WN - 4) 20,000 Truck 70,000 Total 40,000 20,000 10,000 70,000 Working Notes: Working Note-1: Dr Particulars ohn Partner's Capital Account Amount Amount Particulars Ted 10,000 10,000 By balance b/d 20,000 30,000 10,000 Total Amount John 30,000 Amount Ted 10,000 To Drawings To balance c/d Total 30,000 10,000

Working Note-2: Dr Particulars To interest on Citi Bank Loan To opening inventory To profit c/d Total Profit & Loss Account Amount Particulars 2,000 By sale of inventory 30,000 By closing inventory 30,000 62,000 Total Amount 42,000 20,000 62,000 Dr Cash Account Amount Working Note-3: Particulars Amount Particulars To Drawings: John - 10,000 Ted - 10,000 To repayment of Citi Bank loan To interest on Citi Bank Loan To purchase of Truck To balance c/d Total 60,000 42,000 20,000 By balance b/d 30,000 By sale of inventory 2,000 10,000 40,000 1,02,000 Total 1,02,000 Working Note-4: Dr Particulars To sale of Inventory To balance c/d Total Inventory Account Amount Particulars 10,000 By balance b/d 20,000 30,000 Total Amount 30,000 30,000 Working Note-5: Dr Particulars To balance b/d Citi Bank Loan Account Amount Particulars 50,000 By repayment of loan By balance cld 50,000 Total Amount 30,000 20,000 50,000 Total