P $16-6$

Partner income allocation$-$Correction of error

The partnership of Jon, Kel, and Gla was created on January $2,2016,$ with each of the partners contribut$-$

ing cash of $$30,000.$ Reported profits, withdrawals, and additional investments were as follows:

The partnership agreement provides that partners are to be allowed $10$ percent interest on the

beginning$-$of$-$the$-$year capital balances, that Jon is to receive a $$7,000$ salary allowance, and that

remaining profits are to be divided equally.

After the books were closed on December $31,2018,$ it was discovered that depreciation had

been understated by $$2,000$ each year and that the inventory taken at December $31,2018,$ was

understated by $$8,000.$

REQUIRED

Calculate the balances in the three capital accounts on January $1,2019.$

Calculate the balances that should be in the three capital accounts on January $1,2019,$ taking into account

the corrections that must be made for errors made in the calculation of income in the prior years.

Give the journal entry $($one entry$)$ to correct the books on January $1,2019.$