1.

C and D had capital balances of $60,000 and $120,000 respectively on January 1 of the current year. On May 8, C invested an additional $10,000 in the partnership. During the year, C and D withdrew $25,000 and $35,000 respectively. After closing all expense and revenue accounts at the end of the year, Income Summary has a credit balance of $90,000. The net income is divided in the ration of 2:3 after a salary of $40,000 to C.

Journalize the entries to close the income summary account and the drawing accounts.

Prepare the statement of owner's equity for the current year.

2.

Ed and Frank form a partnership by combining the assets of their separate business. Ed contributes accounts receivable with a face amount of $50,000 and equipment with a cost of $180,000 and accumulated depreciation of $100,000. The partners agree that the equipment price is to be priced at $70,000, that $2,500 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $1,500 is reasonable allowance for the un-collectability of the remaining accounts receivable. Frank contributes cash of $20,000 and merchandise inventory of $49,500. The partners agree that the merchandise inventory is to be priced at $51,000.

Journalize the entries to record in the partnership accounts (a) Ed's investment and (b) Frank's investment