Soren-Lindross Partnership 1. The case I.I Formation of the partnership Wendy Soren and Tom Lindross have agreed to form a general partnership, TriGate Partners, to own and operate apartment complexes in Rhode Island. As of January 1, 2004, the partnership takes legal title to the contributed property and commences operations. At the time of formation, Wendy contributed $280,000 cash and an apartment complex, Park Shores Apartments, valued at S2 million. Wendy purchased the complex on April 12, 2001 for $1.6 million dollars and has been operating the property as a sole proprietorship. The property is subject to debt of S600,000 that is assumed by the partnership. Tom contributed $680,000 cash and an apartment complex, Lake View Apartments, valued at $2.9 million and investment land valued at S300,000. Tom purchased the complex on November 7, 2002 for $2.5 million and has been operating the property as a sole proprietorship. The complex is subject to debt of S2.4 million. The land was purchased on August 28, 2002 for S280,000 In November and December 2003, Wendy and Tom paid $25,000 for expenses that qualify as organizational costs. During this time, they also paid S15,000 for costs that meet the definition of start-up expenses. The $40,000 expense was paid for evenly by the two partners. 1.2 Partnership operations The partnership agreement states that Wendy and Tom are to each receive 10 percent interest on beginning capital balances, in addition, Wendy will receive a salary of $60,000 per year. Each will share profits and losses equally. Partnership income in 2004 was $656,000. On December 31, 2004 the partnership admitted Sally Scott to the partnership, giving her a 10 percent interest for $420,000. Prior to admitting Sally, the partnership assets were revalued at $35,000 below their current value. 2. Case requirements Prepare the journal entry to record the partnership formation. Prepare a Schedule of Distribution of Partnership Income for 1. 2