1. © 2014 Cengage Learning. All Rights Reserved. Learning Objectives © 2014 Cengage Learning. All Rights Reserved. LO3 Prepare a distribution of net income statement for a partnership. LO4 Prepare an owners’ equity statement for a partnership.

2. © 2014 Cengage Learning. All Rights Reserved. Distribution of Net Income Statement ●A partnership financial statement showing net income or loss distribution to partners is called a distribution of net income statement. SLIDE 2 LO3 Lesson 23-2

3. © 2014 Cengage Learning. All Rights Reserved. Distribution of Net Income Statement SLIDE 3 LO3 Lesson 23-2 2 2 Name of First Partner Heading 1 1 4 4 Name of Second Partner 6 6 Words Net Income 3 3 First Partner’s Share of Net Income 5 5 Second Partner’s Share of Net Income 7 7 Total Net Income 8 8 Double Rules

4. © 2014 Cengage Learning. All Rights Reserved. Distribution of Net Income Statement with Unequal Distribution SLIDE 4 LO3 Lesson 23-2

5. © 2014 Cengage Learning. All Rights Reserved. Partners’ Capital and Drawing Accounts ●A financial statement that summarizes the changes in owners’ equity during a fiscal period is called an owners’ equity statement. ●Business owners can review an owners’ equity statement to determine if owners’ equity is increasing or decreasing and what is causing the change. SLIDE 5 LO3 Lesson 23-2

6. © 2014 Cengage Learning. All Rights Reserved. Factors That Can Change Owners’ Equity ●Additional investments ●Withdrawals ●Net income or net loss SLIDE 6 LO3 Lesson 23-2

7. © 2014 Cengage Learning. All Rights Reserved. Information Obtained from Each Partner’s Capital and Drawing Account ●Beginning capital amount ●Any additional investments made during the fiscal period ●Each partner’s withdrawal of assets during the fiscal period SLIDE 7 LO3 Lesson 23-2

8. © 2014 Cengage Learning. All Rights Reserved. Partners’ Capital and Drawing Accounts SLIDE 8 LO3 Lesson 23-2

9. © 2014 Cengage Learning. All Rights Reserved. Owners’ Equity Statement SLIDE 9 LO4 Lesson 23-2 2 2 Name of First Partner Heading 1 1 4 4 Name of Second Partner 6 6 Total Owners’ Equity 3 3 First Partner’s Ending Capital 5 5 Second Partner’s Ending Capital 7 7 Double Rules

10. © 2014 Cengage Learning. All Rights Reserved. Owners’ Equity Statement with an Additional Investment and a Net Loss SLIDE 10 LO4 Lesson 23-2

11. © 2014 Cengage Learning. All Rights Reserved. Balance Sheet for a Partnership SLIDE 11 LO4 Lesson 23-2

12. © 2014 Cengage Learning. All Rights Reserved. Lesson 23-2 Audit Your Understanding 1.What information used to prepare an owners’ equity statement is obtained from the distribution of net income statement? SLIDE 12 ANSWER Each partner’s share of net income or net loss Lesson 23-2

13. © 2014 Cengage Learning. All Rights Reserved. Lesson 23-2 Audit Your Understanding 2.What information used to prepare an owners’ equity statement is obtained from the partners’ capital and drawing accounts? SLIDE 13 ANSWER Beginning capital amount, any additional investments made during the fiscal period, and each partner’s withdrawal of assets during the fiscal period Lesson 23-2

14. © 2014 Cengage Learning. All Rights Reserved. Lesson 23-2 Audit Your Understanding 3.What is the procedure for calculating an owner’s end-of-year capital? SLIDE 14 ANSWER Compute ending capital as follows: Share of Net Income less Withdrawals equals Net Increase in Capital. Beginning Capital plus Net Increase in Capital equals Ending Capital. Lesson 23-2