Harris, Harmar and Higgins are partners in the consulting firm of Harris and Associates. The bal­ance sheet of the partnership as at 31 March 2015 is shown below.

 It was agreed that all profits would be divided equally between the partners. 

Business transactions for the year ending 31 March 2016 were as follows (ignore GST):

	Invoices issued for services to clients	$	450 000
Cash receipts: Accounts for fees collected Advances made on behalf of clients repaid		452 000   45 000
		$	497 000

Cash payments: Salaries Rent Office expenses Library maintenance Advances made on behalf of clients Insurance premiums Drawings:  Harris                    Harmar                    Higgins	$	92 800 18 000 19 500 9 200 40 000 6 500 96 000 72 900     36 300
	$	391 200
Accounts payable for office expenses at 31/3/16, $15 000. Furniture to be depreciated at 15% p.a.

Required

A. Prepare the income statement for the year ended 31 March 2016.

B. Prepare a statement of changes in partners’ equity for the year ended 31 March 2016.

C. Prepare the balance sheet as at 31 March 2016.

Transcribed Image Text:

HARRIS AND ASSOCIATES Balance Sheet as at 31 March 2015 CURRENT ASSETS Cash at bank $61 980 Accounts receivable 59 500 Advances – receivables from clients $128 360 6 880 NON-CURRENT ASSETS Professional library 45 000 Office furniture 66 500 111 500 $239 860 CURRENT LIABILITIES $ 15 200 Accrued expenses (office) EQUITY Partner's capital accounts: Harris Harmar $51 450 51 450 Higgins 147 000 44 100 Partner's retained earnings: Harris Harmar 29 500 25 500 Higgins 77 660 22 660 $239 860