CHAPTER 3 Business structures 105Partnership reports
The financial statements in illustrative example 3.6 report on the financial performance and financial
position of the partnership, Martina, James and Brigitte — Accountants. Compared with a sole trader,
the main difference in the distribution of profit (loss) here is that the profit (loss) is split according to
each of the partner’s original capital contributions, as stated in the partnership agreement. The main dif-
ference in the balance sheet is that there are three capital accounts — one for each partner. There are also
three current accounts that represent the combined sum of all the years’ profits that have been left in the
partnership less the drawings taken out of the business by each partner.
ILLUSTRATIVE EXAMPLE 3.6Financial statements for a partnership
Martina, James and Brigitte — Accountants
Statement of profit or loss for the period ended 31 December 2016
Income
Fees $40 000
Expenses
Administrative expenses
Rates
Finance expenses
Depreciation of office furniture
Depreciation of office equipment$ 2 400
4 000
400
2 000
1 000 9 800
Profit $30 200
Distribution to partners
Salary
— Martina
— James
— Brigitte8 000
4 000
6 000 18 000
Distribution of remaining profit to current accounts
— Martina (100 000/560 000 × 12 200)
— James (400 000/560 000 × 12 200)
— Brigitte (60 000/560 000 × 12 200)2 179
8 714
1 307 12 200
Total distributions to partners $30 200Martina, James and Brigitte — Accountants
Balance sheet as at 31 December 2016
Current assets
Cash in bank $95 200 $ 95 200
Non-current assets
Office building
Office furniture
Less: Accumulated depreciation — office furniture60 000
2 000400 00058 000
Office equipment
Less: Accumulated depreciation — office equipment30 000
1 000 29 000
Total assets 582 200
Non-current liabilities
Bank loan 10 000
Total liabilities 10 000
Net assets $ 572 200