Chapter 12, Problem 12.6E

(a)

To determine

Partnership: An association of more than one party with the objective of sharing profit and losses is called partnership. It is one form of business organization where risk is shared among two or more partners for their mutual benefit. The liability of partners is unlimited in partnership. Partnership can be easily formed because the process is simples and there less complexities in legal rules.

Capital Statement: The financial statement which helps to predict the change in capital of owner’s due investment made in business, personal drawing by owner and net income for an accounting year is called capital statement.

To prepare: The partners’ capital statement for the year.

(b)

To determine

To prepare: The owner’s equity section of the balance sheet at December 31, 2017.