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Siblings Jordan and Morgan Hartley are parthers in a trendy toy store called ToyMania! Jordan, as senlor partner, receives an annual salary allowance of $20,000 and 60 percent of all income/losses after salary and interest allowances are paid. Junior parther Morgan receives an annual salary allowance of $15,000 and 40 percent of all income/losses after salary and interest allowances are paid. The partners recelve a 10 percent interest allowance at the end of the accounting period based on their respective January 1 capital account balances. Capital balances as of January 1 are $60,000 for Jordan Hartley and $40,000 for Morgan Hartley. ToyMania! uses the allowance method for uncollectible accounts. Credit terms are 2/10,n/30. Longer payment terms are avallable by accepting interest-bearing notes recelvable. Terms will vary depending on individual circumstances and will be provided in the related transactions. Notes under $1,000 are collected by ToyMania! while notes greater than $1,000 are collected by either Dean Bank or Marshall Bank. Interest is based on a 360-day year. Estimated uncollectibles are based on 3 percent of accounts receivable. Accounts are written off as they are deemed uncollectible; however, efforts to coliect all receivables continue for a two-year period. ToyManial occasionally writes notes to finance larger purchases and to extend time on accounts payable. Terms will be specified in the reiated transactions. Again, Interest is based on a 360-day year. Plant assets are depreciated using one of the various GAAP methods for depreciation. Fully depreciated assets that are useful remain in service until a sale, trade, or disposal is necessary. ToyManial holds a patent on a toy which is amortized during yearend adjustments. The $25,000 patent's economic life is 10 years although the legal life is 20 years. A periodic inventory system is maintained valuing inventory using the First-In, First-Out (FIFO) method, The lower-of-cost-ormarket rule is applied by recognizing a loss on write-down of inventory when necessary. Beginning balances for Merchandise Inventory and Estimated Returns Inventory were $91,250 and $3,000, respectively, on January 1. The January 1 balance of Customer Refunds Payable was $4,000. Selected transactions for 20.1 are provided below. Siblings Jordan and Morgan Hartley are parthers in a trendy toy store called ToyMania! Jordan, as senlor partner, receives an annual salary allowance of $20,000 and 60 percent of all income/losses after salary and interest allowances are paid. Junior parther Morgan receives an annual salary allowance of $15,000 and 40 percent of all income/losses after salary and interest allowances are paid. The partners recelve a 10 percent interest allowance at the end of the accounting period based on their respective January 1 capital account balances. Capital balances as of January 1 are $60,000 for Jordan Hartley and $40,000 for Morgan Hartley. ToyMania! uses the allowance method for uncollectible accounts. Credit terms are 2/10,n/30. Longer payment terms are avallable by accepting interest-bearing notes recelvable. Terms will vary depending on individual circumstances and will be provided in the related transactions. Notes under $1,000 are collected by ToyMania! while notes greater than $1,000 are collected by either Dean Bank or Marshall Bank. Interest is based on a 360-day year. Estimated uncollectibles are based on 3 percent of accounts receivable. Accounts are written off as they are deemed uncollectible; however, efforts to coliect all receivables continue for a two-year period. ToyManial occasionally writes notes to finance larger purchases and to extend time on accounts payable. Terms will be specified in the reiated transactions. Again, Interest is based on a 360-day year. Plant assets are depreciated using one of the various GAAP methods for depreciation. Fully depreciated assets that are useful remain in service until a sale, trade, or disposal is necessary. ToyManial holds a patent on a toy which is amortized during yearend adjustments. The $25,000 patent's economic life is 10 years although the legal life is 20 years. A periodic inventory system is maintained valuing inventory using the First-In, First-Out (FIFO) method, The lower-of-cost-ormarket rule is applied by recognizing a loss on write-down of inventory when necessary. Beginning balances for Merchandise Inventory and Estimated Returns Inventory were $91,250 and $3,000, respectively, on January 1. The January 1 balance of Customer Refunds Payable was $4,000. Selected transactions for 20.1 are provided below