In the early part of 2018, the partners of Hugh, Jacobs, and Thomas sought assistance from a local accountant. They had begun a new business in 2017 but had never used an accountant's services.

Hugh and Jacobs began the partnership by contributing $150,000 and $100,000 in cash, respectively. Hugh was to work occasionally at the business, and Jacobs was to be employed full-time. They decided that year-end profits and losses should be assigned as follows:

1. Each partner was to be allocated 10 percent interest computed on the beginning capital balances for the period.
2. A compensation allowance of $5,000 was to go to Hugh with a $25,000 amount assigned to Jacobs.
3. Any remaining income would be split on a 4:6 basis to Hugh and Jacobs, respectively.

In 2017, revenues totaled $175,000, and expenses were $146,000 (not including the partners' compensation allowance). Hugh withdrew cash of $9,000 during the year, and Jacobs took out $14,000. In addition, the business paid $7,500 for repairs made to Hugh's home and charged it to repair expense.

On January 1, 2018, the partnership sold a 15 percent interest to Thomas for $64,000 cash. This money was contributed to the business with the bonus method used for accounting purposes.

Answer the following questions:

1. What journal entries should the partnership have recorded on December 31, 2017?
2. What journal entry should the partnership have recorded on January 1, 2018?