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On January 1 Carol Farmer and Jim Romans formed a partnership, Research Consultants. Each partner invested $50,000 in cash on that date. The partnership agreement stated that the partners would share net income or loss equally. During the year Farmer invested an additional$2,000 and withdrew $7,500 for personal use. Romans invested an additional$1,500 and withdrew $8,500. Net income for the first year was$33,176. In your working papers, prepare a statement of changes in partners’ equity for the year ended December 31.

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Due to the fact that the two partners split income equally in order to find the increase to each partners’ equity due to income we simply divide the net income by two. 33,176/2= 16,588

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