K. Clarkson and M. Carlson worked for a large tech company designing web catalogs for the company. K. Clarkson designed the web layout page and did all of coding. M. Carlson did the content of the page and the editing. They decided to start their own company to provide those services to clients. They started a company on 5/1/21 as a partnership. They had their attorney draw up a partnership agreement, got a business license and deposited money into the partnership banking account on that date. K. Clarkson invested $35,000 in cash into the partnership and M. Carlson invested $30,000 in cash into the partnership. M. Carlson also gave ownership of 5 computers, software, one printer and a Wi-Fi system to the partnership which had a market value of $6,000. a. Make the required journal entries to record the activities above.

The partnership had revenues of $330,000 and expenses of $140,000 for the calendar year ending 12/31/21. The partnership agreement required that each partner receive a $4,000 per month salary. Any remaining profits were to be distributed to each partner as a percentage of their capital accounts at the end of the year after salaries had been deducted The salary had been withdrawn in cash at the end of each month since the formation of the partnership and the appropriate accounting entries were made in the accounting system. However the accounting system is close at the end of the calendar year therefore the Drawing Accounts for each partner have not been closed and the Capital Accounts do not reflect the correct balance at the end of the year.

b. Use The information in the worksheet to Make the closing journal entry on 12/31/21 to recognize the profit of the company, the profit of the company, the distribution of it to the partners and the closing in of the Drawing accounts

M. Carlson Capital Total Capital Account Balance 5/1/21: Less: Salary (Drawing) Captital 12/31/21 % of owners capital account: Total Share of the Profit for each partner New balance in Capital accounts 9/30/21: K. Clarkson Capital $ $35,000 (32,000) $3,000 43% $81,700 $ 36,000 ($ 32,000) $ 4,000 57% $108,300 $ 71,000 (64,000) $ 7,000 100% $ 190,000 $ 116,700 $144,300 $ 261,000