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.

Here is the chart of accounts:

Here are the labels and amount descriptions:

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