For several years, Theo Spidell has operated a consulting company as a sole proprietor. On January 1, 2017 he formed a partnership with Juanita Diaz called Insect Management.

The facts are as follows:

• Spidell was to transfer the cash, accounts receivable, furniture and equipment, and all the liabilities of the sole proprietorship in return for 60% of the partnership capital.
• The fair market value in the relevant accounts of the sole proprietorship at the close of business on December 31, 2016 are shown inFigure 15.5.

Cash - 52,000

Accounts Recievable - 120,000

Furniture and Equpiment - 34,000

Accounts Payable - 10,000

• In exchange for 40% of the partnership, Diaz will invest $130,667 in cash.
• Each partner will be paid a salary - Spidell $3,000 per month and Diaz $2,000 per month.
• The partnership's net income for 2016 was $300,000. The partnership agreement dictates an income-sharing ratio.
• Assume that all allocations are 60% Spidell and 40% Diaz.

Record the following transactions as journal entries in the partnership's records.

1. Receipt of assets and liabilities from Spidell
2. Investment of cash by Diaz
3. Profit or loss allocation including salary allowances and the closing balance in the Income Section account