Lorena Lally and Allie Raras formed a partnership on March 15. The partners agreed to invest equal amounts of capital. Lally invested her proprietorship€™s assets and liabilities (credit balances in parentheses). See the table that follows.

On March 15, Raras invested cash in an amount equal to the current market value of Lally€™s partnership capital. The partners decided that Lally will earn 70% of partnership profits because she will manage the business. Raras agreed to accept 30% of the profits. During the period ended December 31, the partnership earned net income of $74,000. Lally€™s drawings were $42,000, and Raras€™s drawings totaled $22,000.
Requirements
1. Journalize the partners€™ initial investments.
2. Prepare the partnership balance sheet immediately after its formation on March 15.
3. Journalize the closing of the Income summary and partner Drawing accounts on December31.

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Lally's Book Values $12,300 47,000 3,600 41,000 (24,000) Current Market Values $10,600 38,000 3,400 28,000 (24,000) Accounts receivable Prepaid expenses Store equipment Accounts payable