Owner’s Equity in a Partnership

To track the equity for each partner in a partnership, you need to create three accounts for each partner: one for the partner’s contributed capital, one for the partner’s draws, and one for the partner’s share of the distributed income.

Amounts that a partner withdraws, of course, get tracked with the partner’s draws account.

casestudy.eps The partner’s share of the partnership’s profits gets allocated to the partner’s profit share account. (Your partnership agreement, by the way, should say how the partnership income is distributed between the partners.) Table 20-2 gives an example of owner’s equity accounts in a partnership.

Table 20-2	An Example of Owner’s Equity  	Accounts in a Partnership

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