P Below is an alphabetical listing of the accounts in the general ledger of Clay and Ogletree, LLP, at the partnership’s fiscal year end, , September 30, 2024. Adjusting entries for the year have been posted and included in these balances. 

Accounts payable ......................................................................$ 21,500 

Interest expense ..........................................................................$ 5,000 

Accounts receivable ....................................................................105,000 

M. Ogletree, capital ......................................................................37,500 

Accumulated depreciation—equipment ..................................12,000 

M. Ogletree, drawings................................................................. 100,000 

Cash ................................................................................................13,500 

Notes payable .................................................................................22,500 

Depreciation expense ....................................................................12,000 

Prepaid insurance ............................................................................3,500 

Equipment ........................................................................................60,000 

Property tax expense ......................................................................15,000 

G. Clay, capital................................................................................... 75,000 

Salaries expense ...............................................................................225,000 

G. Clay, drawings ..............................................................................150,000 

Service revenue .................................................................................515,000 

Insurance expense ..............................................................................18,500 

Unearned revenue ...............................................................................24,000

Additional information: 

1. The balance in Clay’s capital account includes an additional investment of $10,000 made during the year. 

2. $5,000 of the note payable is due within the next year. 

3. Clay and Ogletree share profit and loss in the ratio of 3:2, respectively. 

Instructions 

a. Prepare an income statement, statement of partners’ equity, and balance sheet. 

b. Journalize the closing entries. 

Should the two partners draw equal amounts each year? Both of them work full-time for the partnership.