On June 1, 2009, Kevin Schmidt and David Cohen form a partnership. Schmidt agrees to invest $12,000 cash and merchandise inventory valued at $32,000. Cohen invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring his total capital to $80,000. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow:

The partnership agreement includes the following provisions regarding the division of net income: interest of 10% on original investments, salary allowances of $36,000 (Schmidt) and $22,000 (Cohen), and the remainder equally.
Instructions
1. Journalize the entries to record the investments of Schmidt and Cohen in the partnership accounts.
2. Prepare a balance sheet as of June 1, 2009, the date of formation of the partnership of Schmidt and Cohen.
3. After adjustments and the closing of revenue and expense accounts at May 31, 2010, the end of the first full year of operations, the income summary account has a credit balance of $84,000, and the drawing accounts have debit balances of $30,000 (Schmidt) and $25,000 (Cohen). Journalize the entries to close the income summary account and the drawing accounts at May 31,2010.

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Cohen's Ledger Agreed-Upon Balance Balance $18,400 800 21,400 36,000 | 12,000. 6,500 4,000 Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Equipment Accumulated Depreciation-Equipment Accounts Payable Notes Payable $14,900 28,600 35,000 6,500 4,000