Tom and Julie formed a management consulting partnership on January 1, 2019. The fair value of the net assets invested by each partner follows:

During the year, Tom withdrew $15,000 and Julie withdrew $12,000 in anticipation of operating profits. Net profit for 2019 was $50,000, which is to be allocated based on the original net capital investment.

Required:

A. Prepare journal entries to:

1. Record the initial investment in the partnership.

2. Record the withdrawals.

3. Close the Income Summary and Drawing accounts.

B. Prepare a statement of changes in partners? capital for the year ended December 31, 2014.

Transcribed Image Text:

Tom Julie Cash Accounts receivable Office supplies Office equipment $13,000 8,000 2,000 30,000 $12,000 6,000 800 Land Accounts payable Mortgage payable 2,000 30,000 5,000 18,800