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

Reported Net Income Withdrawals Additional Investments 2016 $19,000 $4,000 Kel $5,000 Gla 5,000 Jon 2017 22,000 8,000 Gla 5,000 Jon 3,000 Kel 2018 29,000 2,000 Gla 6,000 Gla 4,000 Kel 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 1. Calculate the balances in the three capital accounts on January 1, 2019.