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Tom Tylor & DickDavidson go into business together as a partnership (named Tom&Dick LLP.), selling...

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Accounting

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Tom Tylor & DickDavidson go into business together as a partnership (named Tom&Dick LLP.), selling computer software through the internet. On January 1, they each put in $6,000 as capital, and this goes into the Tom&Dick LLP's account at their local bank. They bought will be amortized over the next three years, with a disposal value of $1,000. Dick's dad has agreed to let them operate out of his basement if they pay him a rent of 10% of their annual profit, or $1,200 per year, whichever is greater. At the end of the first month of business, they in have made no sales and incurred no expenses, other than the amortization of the computer equipment and the rent (which is owed to Dick's dad). At the end of January, the accounting equation is

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