Steve Reese is a well$-$known interior designer in Fort Worth, Texas. He wants to start his own business and convinces Rob O$$Donnell$,$ a local merchant, to contribute the capital to form a partnership. On January $1,2022,$ O$$Donnell invests a building worth $$60,000$ and equipment valued at $$32,000$ as well as $$28,000$ in cash. Although Reese makes no tangible contribution to the partnership, he will operate the business and be an equal partner in the beginning capital balances.b$.$ Prepare journal entries to record the previous transactions on the assumption that the goodwill $($or revaluation$)$ method is used.Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a $60$:$40$ basis, respectively,

wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $$5,000.$ At the date the partnership

ceases operations, the balance sheet is as follows:

Required:

Part A:

Prepare journal entries for the following transactions that occurred in chronological order:

a$.$ Distributed safe cash payments to the partners.

b$.$ Paid $$21,300$ of the partnership's liabilities.

c$.$ Sold noncash assets for $$136,500.$

d$.$ Distributed safe cash payments to the partners.

e$.$ Paid remaining partnership liabilities of $$14,200.$

f$.$ Paid $$3,700$ in liquidation expenses; no further expenses will be incurred.

g$.$ Distributed remaining cash held by the business to the partners.

Part B:

Prepare a final statement of partnership liquidation.

Complete this question by entering your answers in the tabs below.

Prepare a final statement of partnership liquidation.

Note: Amounts to be deducted should be entered in minus sign.

Drawings need not be recorded, although the balances should be included in the closing entries.

Complete this question by entering your answers in the tabs below.

Prepare journal entries to record the previous transactions on the assumption that the goodwill $($or revaluation$)$ method is used.

Drawings need not be recorded, although the balances should be included in the closing entries.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Do not round

intermediate calculations. Round your final answers to the nearest dollar amount.

Journal entry worksheet

Record the initial investment of assets by partners.

Note: Enter debits before credits.

To entice O$$Donnell to join this partnership, Reese draws up the following profit and loss agreement:

O$$Donnell will be credited annually with interest equal to $20$ percent of the beginning capital balance for the year.

O$$Donnell will also have added to his capital account $10$ percent of partnership income each year $($without regard for the preceding interest figure$)$ or $$8,000,$ whichever is larger. All remaining income is credited to Reese.

Neither partner is allowed to withdraw funds from the partnership during $2022.$ Thereafter, each can draw $$5,000$ annually or $15$ percent of the beginning capital balance for the year, whichever is larger.

The partnership reported a net loss of $$9,000$ during the first year of its operation. On January $1,2023,$ Terri Dunn becomes a third partner in this business by contributing $$10,000$ cash to the partnership. Dunn receives a $20$ percent share of the business$$s capital. The profit and loss agreement is altered as follows:

O$$Donnell is still entitled to $(1)$ interest on his beginning capital balance as well as $(2)$ the share of partnership income just specified.

Any remaining profit or loss will be split on a $5$:$5$ basis between Reese and Dunn, respectively.

Partnership income for $2023$ is reported as $$85,000.$ Each partner withdraws the full amount that is allowed.

On January $1,2024,$ Dunn becomes ill and sells her interest in the partnership $($with the consent of the other two partners$)$ to Judy Postner. Postner pays $$80,000$ directly to Dunn. Net income for $2024$ is $$65,000$ with the partners again taking their full drawing allowance.

On January $1,2025,$ Postner withdraws from the business for personal reasons. The articles of partnership state that any partner may leave the partnership at any time and is entitled to receive cash in an amount equal to the recorded capital balance at that time plus $10$ percent.

Required:

Prepare journal entries to record the preceding transactions on the assumption that the bonus $($or no revaluation$)$ method is used. Drawings need not be recorded, although the balances should be included in the closing entries.

Prepare journal entries to record the previous transactions on the assumption that the goodwill $($or revaluation$)$ method is used. Drawings need not be recorded, although the balances should be included in the closing entries.