On March 1, 2016, Eric Keene and Abigail McKee form a partnership. Keene agrees to invest $20,960 in cash and merchandise inventory valued at $56,060. McKee invests certain business assets at valuations agreed upon, transfers business liabilities, and contributes sufficient cash to bring her total capital to $59,510. Details regarding the book values of the business assets and liabilities, and the agreed valuations, follow:

The partnership agreement includes the following provisions regarding the division of net income: interest on original investments at 10%, salary allowances of $22,140 (Keene) and $30,840 (McKee), and the remainder equally.

Required:

1.

Journalize the entries on March 1 to record the investments of Keene and McKee in the partnership accounts.*

2.

Prepare a balance sheet as of March 1, 2016, the date of formation of the partnership of Keene and McKee.*

3.

After adjustments and the closing of revenue and expense accounts at February 28, 2017, the end of the first full year of operations, the income summary account has a credit balance of $90,070, and the drawing accounts have debit balances of $28,170 (Keene) and $30,200 (McKee). Journalize the entries on February 28 to close the income summary account and the drawing accounts at February 28, 2017.*

*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.

McKee's Ledger Agreed-Upon Accounts Receivable Allowance for Doubtful Accounts Equipment Accumulated Depreciation Accounts Payable Notes Payable (current) Balance $18,460 1,570 83,160 29,820 15,330 36,100 Valuation $17,560 1,810 54,420 15,330 36,100