On May 1, 2005, Crystal Hall and Doug Tucker form a partnership. Hall agrees to invest $10,500 in cash and merchandise inventory valued at $36,500. Tucker invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring his total capital to $40,000. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow:

The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 10%, salary allowances of $18,000 and $21,000 respectively, and the remainder equally.

Instructions
1. Journalize the entries to record the investments of Hall and Tucker in the partnership accounts.
2. Prepare a balance sheet as of May 1, 2005, the date of formation of the partnership of Hall and Tucker.
3. After adjustments and the closing of revenue and expense accounts at April 30, 2006, the end of the first full year of operations, the income summary account has a credit balance of $72,700, and the drawing accounts have debit balances of $20,000 (Hall) and $26,000 (Tucker). Journalize the entries to close the income summary account and the drawing accounts at April30.

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Tucker's Ledger Balance Agreed-Upon Accounts Receivable Allowance for Doubtful Accounts Equipment Accumulated Depreciation Accounts Payable Notes Payable Valuation $18,000 1,000 40,000 14,000 15,000 $20,750 950 79,100 35,200 14,000 15,000