Answer:
The Preparation of statement of partners’ equity is shown below
Explanation:
The preparation of statement of partners’ equity is shown below:-
Mike Rachel
Beginning equity $40,000 $60,000
Salary allowance $5,000 $9,000
Interest allowance $4,000 $6,000
Share of remaining net income $3,000 $3,000
Drawings -$1,000 -$1,000
Ending equity $51,000 $77,000
Working Note
Interest allowance for Mike = $40,000 × 10%
= $4,000
Interest allowance for Rachel = $60,000 × 10%
= $6,000
Remaining share of net income after salary allowance and interest allowance = Net income - Salary allowance - Interest allowance
= $30,000 - $5,000 - $9,000 - $4,000 - $6,000
= $6,000
Mike's share of remaining income = $6,000 × 50%
= $3,000
Rachel's share of remaining income = $6,000 × 50%
= $3,000
