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Understanding Financial Statements for Partnerships: Key Steps and Calculations

This chapter provides essential steps for preparing financial statements for partnerships, starting from the worksheet to the income statement. It covers how to accurately transition numbers from the income statement to the distribution of net income and finally to the owner's equity statement. Included are insights on the importance of merchandise inventory balances and key calculations relevant to partnership finances. Understanding these components is crucial for accurate reporting and financial analysis in partnership structures.

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Understanding Financial Statements for Partnerships: Key Steps and Calculations

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  1. Chapter 16 Financial Statements for Partnerships

  2. Steps that you need to know • Numbers from the worksheet to the Income statement • Numbers from the income statement to the Distribution of net income • Numbers from the distribution of net income to the Owner’s Equity statement

  3. Income Statement for a Partnership Comes from the beginning balance of the merchandise inventory account on worksheet Comes from the ending balance of the merchandise inventory account on the worksheet

  4. Steps that you need to know • Numbers from the worksheet to the Income statement • Numbers from the income statement to the Distribution of net income • Numbers from the distribution of net income to the Owner’s Equity statement

  5. 69615.85 69615.85 423120 423120 360532.68 360532.68

  6. Please work on “On Your Own” on Page 404 of your textbook

  7. Steps that you need to know • Numbers from the worksheet to the Income statement • Numbers from the income statement to the Distribution of net income • Numbers from the distribution of net income to the Owner’s Equity statement

  8. 423420/423120 = 1 or 100% 100% 48.6% 205800/423120 = 48.6% 51.4 217320/423120 = 51.4 205800/423120 = 34.9 34.9 205800/423120 = 48.6% 48.6%

  9. Steps that you need to know • Numbers from the worksheet to the Income statement • Numbers from the income statement to the Distribution of net income • Numbers from the distribution of net income to the Owner’s Equity statement

  10. Distribution of Net Income We will use these numbers to put them into the owner’s equity statement

  11. Steps that you need to know • Numbers from the worksheet to the Income statement • Numbers from the income statement to the Distribution of net income • Numbers from the distribution of net income to the Owner’s Equity statement

  12. Steps that you need to know • Numbers from the worksheet to the Income statement • Numbers from the income statement to the Distribution of net income • Numbers from the distribution of net income to the Owner’s Equity statement

  13. Order of Financial Sheet • Income Statement • Distribution of Net Income • Owner’s Equity Statement • Balance Sheet

  14. 16- 1,2,3,5,6

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