The ledger of Peter Sato and May Koening, attorneys-at-law, contains the following accounts and balances after adjustments have been recorded on December 31, 2008:

The balance in Koening's capital account includes an additional investment of $8,000 made on August 10, 2008.

Instructions
1. Prepare an income statement for 2008, indicating the division of net income. The articles of partnership provide for salary allowances of $40,000 to Sato and $50,000 to Koening, allowances of 10% on each partner's capital balance at the beginning of the fiscal year, and equal division of the remaining net income or net loss.
2. Prepare a statement of partners' equity for 2008.
3. Prepare a balance sheet as of the end of2008.

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Debit Balances Credit Balances 30,000 38,900 1,900 25,000 130,000 Accounts Receivable Supplies Building Accumulated Depreciation-Building 69,200 39,000 21,500 2,100 2,000 95,000 Accumulated Depreciation-Office Equipment Accounts Payable Peter Sato, Capital Peter Sato, Drawing May Koening, Capital May Koening, Drawing Professional Fees Salary Expense Depreciation Expense Building Property Tax Expense Heating and Lighting Expense Supplies Expense Depreciation Expense-Office Equipment Miscellaneous Expense 50,000 65,000 70,000 297,450 132,300 10,500 7,000 6,300 2,850 2,800 5,700 52,250 552,250