During the first year, the Martin and Steven partnership in SE2 earned an income of $10,000. Assume the partners agreed to share income and losses by figuring interest on the beginning capital balances at 10 percent, allowing a salary of $12,000 to Martin, and dividing the remainder equally. How much income (or loss) should be transferred to each Capital account?
In SE2, Martin contributes cash of $24,000, and Steven contributes office equipment that cost $20,000 but is valued at $16,000 to the formation of a new partnership. Prepare the journal entry to form the partnership.