Chapter 12, Problem 12.7E

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.

Classified Balance Sheet: This is a financial statement where the assets, liabilities, and stockholders’ equity are organized and reported as different groups, and sub-groups on the basis of the nature of the classification made of a company at a particular point of time. It reveals the financial health of a company. Thus, this statement is also called as the statement of financial position. It helps the users to know about the creditworthiness of a company as to whether the company has enough assets to pay off its liabilities.

To prepare: A classified balance sheet for the partnership after the partners’ investments on December 31, 2017.