On June 30, Allie Hayes and Mandy McKay formed a partnership. The women agree to invest equal amounts of capital. Hayes invests her proprietorship's assets and liabilities (credit balances in parentheses), as follows:

On June 30, McKay invests cash in an amount equal to the current market value of Hayes' partnership capital. The partners decide that Hayes will earn two-thirds of partnership profits because she will manage the business. McKay agrees to accept one-third of the profits. During the remainder of the year, the partnership earns net income of \(\$ 90,000\). Hayes' drawings are \(\$ 39,000\), and McKay's drawings are \(\$ 31,000\).

Requirements 

1. Journalize the partners' initial investments.

2. Prepare the partnership balance sheet immediately after its formation on June 30.

Transcribed Image Text:

Accounts receivable.... $ 7,200 Hayes's Book Values Current Market Values $ 7,000 Inventory 22,000 24,000 Prepaid expenses. 1,700 1,000 Office equipment........ 45,000 27,000 Accounts payable (19,000) (19,000)