In the early part of 2021, the partners of Hugh, Jacobs, and Thomas sought assistance from a local accountant. They had begun a new business in 2020 but had never used an accountants services.

Hugh and Jacobs began the partnership by contributing $85,000 and $35,000 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:

• Each partner was to be allocated 10 percent interest computed on the beginning capital balances for the period.
• A compensation allowance of $5,000 was to go to Hugh with a $17,000 amount assigned to Jacobs.
• Any remaining income would be split on a 4:6 basis to Hugh and Jacobs, respectively.

In 2020, revenues totaled $110,000, and expenses were $84,000 (not including the partners compensation allowance). Hugh withdrew cash of $5,000 during the year, and Jacobs took out $10,000. In addition, the business paid $7,000 for repairs made to Hughs home and charged it to repair expense.

On January 1, 2021, the partnership sold a 20 percent interest to Thomas for $49,000 cash. This money was contributed to the business with the bonus method used for accounting purposes.

Required c Required D What journal entries should the partnership have recorded on December 31, 2020? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction General Journal Debit Credit 1 1 7,000 Hugh, drawings Repair expense OO 7.000 2 2 12.000 10.000 Hugh, capital Jacobs, capital Hugh, drawings Jacobs, drawings 12.000 10.000 3 3 Revenues 110,000 Expenses Income summary 77,000 33.000 4 4 33.000 Income summary Hugh, capital Jacobs, capital 22.000 19,800