Hugh and Jacobs began a partnership on January 1, 2017 by contributing $150,000 and $100,000 in cash, respectively. Hugh works occasionally at the business, and Jacobs is employed full-time. They decided that year-end profits and losses should be assigned as follows:

Each partner is allocated 15 percent interest computed on the beginning capital balances for the year.

An annual compensation allowance of $10,000 for Hugh and $30,000 for Jacobs.

Any remaining income is split on a 4:6 basis to Hugh and Jacobs, respectively.

In 2017, revenues totaled $175,000, and expenses were $146,000 (before partners interest and compensation). Hugh withdrew cash of $11,000 during the year, and Jacobs took out $20,000. In addition, the business paid $7,500 for repairs made to Hughs home and charged it to repair expense. On January 1, 2018, the partnership sold a 15 percent interest to Thomas for $86,000 cash. This money was contributed to the business with the bonus method used for accounting purposes. Answer the following items: a) Prepare a schedule to calculate the ending capital balances for Hugh and Jacobs on December 31, 2017. b) Prepare the journal entry for the partnership on January 1, 2018 to record the entry of the new partner Thomas.