Lincoln and Rafferty formed a partnership on March 15, 2024. The partners agreed to contribute equal amounts of capital. Lincoln contributed her sole proprietorship’s assets and liabilities (credit balances in parentheses) as follows:

On March 15, Rafferty contributed cash in an amount equal to the current market value of Lincoln’s partnership capital. The partners decided that Lincoln will earn 60% of partnership profits because she will manage the business. Rafferty agreed to accept 40% of the profits. During the period ended December 31, the partnership earned net income of $72,000. Lincoln’s withdrawals were $36,000, and Rafferty’s withdrawals totaled $26,000.

Requirements
1. Journalize the partners’ initial contributions.
2. Prepare the partnership balance sheet immediately after its formation on March 15, 2024.
3. Journalize the closing of the Income Summary and partner Withdrawal accounts on December 31, 2024.

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Accounts Receivable Merchandise Inventory Prepaid Expenses Store Equipment, Net Accounts Payable Lincoln's Business Book Value $ 12,200 42,000 3,500 42,000 (26,000) Current Market Value $ 10,500 35,000 2,800 23,000 (26,000)