On April 1, 2015, Whitney Lang and Eli Capri form a partnership. Lang agrees to invest $18,000 cash and merchandise inventory valued at $50,000. Capri invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring his total capital to $120,000. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow:

	Capris	Agreed-Upon
	Ledger Balance	Balance
Accounts Receivable	$45,700	$43,400
Allowance for Doubtful Accounts	3,200	3,500
Merchandise Inventory	31,500	28,900
Equipment	89,500	63,400
Accumulated DepreciationEquipment	19,000
Accounts Payable	23,400	23,400
Notes Payable (current)	15,000	15,000

The partnership agreement

The formal written contract creating a partnership.

includes the following provisions regarding the division of net income: interest of 10% on original investments, salary allowances of $36,000 (Lang) and $22,000 (Capri), and the remainder equally.

Required:

1.

Journalize the entries on April 1 to record the investments of Lang and Capri in the partnership accounts.*

2.

Prepare a balance sheet as of April 1, 2015, the date of formation of the partnership of Lang and Capri.*

3.

After adjustments and the closing of revenue and expense accounts at March 31, 2016, the end of the first full year of operations, the income summary account has a credit balance of $118,000, and the drawing accounts have debit balances of $40,000 (Lang) and $30,000 (Capri). Journalize the entries to close the income summary account and the drawing accounts at March 31, 2016.*

*Refer to the Chart of Accounts and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.