On March 1, Eckert and Kelley formed a partnership. Eckert contributed $82,500 cash, and Kelley contributed land valued at $60,000 and a building valued at $100,000. The partnership also took Kelleys $92,500 long- term note payable associated with the land and building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $25,000, both get an annual interest allowance of 10% of their initial capital investment, and any remaining income or loss is shared equally. On October 20, Eckert withdrew $34,000 cash and Kelley withdrew $20,000 cash. After adjusting and closing entries are made to the revenue and expense accounts at December 31, the Income Summary account had a credit balance of $90,000.

1. Prepare journal entries to record (a) the partners initial capital investments, (b) their cash withdraw- als, and (c) the December 31 closing of both the withdrawals and Income Summary accounts.

2. Determine the balances of the partners capital accounts as of December 31.