Groucho, Harpo, and Chico form a partnership on January 1, 2021. Groucho contributes $525,000, Harpo $315,000, and Chico $210,000 to a business called Marx Brothers' Partnership. On a monthly basis, each partner is allocated income and is allowed to receive cash from the business in proportion to the capital they provided. Assume that Groucho receives $8,400 cash per month.

Required:

a. Prepare the journal entry for the following transactions: (i) The initial investment. (ii) The monthly distribution amounts for each of the three partners. (iii) The allocation of an annual net income of $378,000. For purposes of this journal entry, assume Sales Revenue totaled $567,000 and that all expenses, totaling $189,000, were recorded in a single account called Operating Expenses. (iv) The closing of the drawings accounts at the end of the year.

b. Prepare a Statement of Partners' Equity (assume no additional investments made