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 $1,2019,$ O'Donnell invests a building worth $$52,000$ and equipment volued ot $$16,000$ as well os $$12,000$ in cash. Although Reese mokes no tongible contribution to the portnership, he will operate the business and be an equal partner in the beginning copital balances.

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 bolance for the yeor.

O'Donnell will also have added to his copital account $15$ percent of partnership income each year $($without regard for the preceding interest figure$)$ or $$4,000,$ whichever is lorger. All remaining income is credited to Reese.

Neither partner is allowed to withdraw funds from the partnership during $2019.$ Thereofter, each can draw $$5,000$ annually or $20$ percent of the beginning capital balance for the year, whichever is larger.

The partnership reported a net loss of $$10,000$ during the first year of its operation. On January $1,2020.$ Terri Dunn becomes a third portner in this business by contributing $$15,000$ cosh to the portnership. Dunn receives a $20$ percent share of the business's copital. The profit and loss agreement is altered as follows:

O'Donnell is still entitled to $(1)$ interest on his beginning capital bolance os well as $(2)$ the share of partnership income just specified. $-$ Any remaining profit or loss will be split on a $6$:$4$ basis between Reese and Dunn, respectively.

Partnership income for $2020$ is reported as $$44,000.$ Each partner withdraws the full amount that is allowed.

On Jonuary $1,2021,$ Dunn becomes ill and sells her interest in the partnership $($with the consent of the other two portners$)$ to Judy Postner. Postner pays $$46,000$ directly to Dunn. Net income for $2021$ is $$61,000$ with the partners ogain taking their full drowing allowance.

On January $1,2022$ 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.

a$.$ 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.

b$.$ 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.

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

Required A

Prepare joumal 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. $($If no entry is required for a transaction$/$event$,$ select $"$No joumal entry required" in the first account field. Round your answers to the nearest dollar amount.$)$

Journal entry worksheet

$\backslash$table$[[1,2,3,4,5,6,7,8,9]]$

Record the initial investment of assets by partners.

Nate: Erter debies before credits.

$\backslash$table$[[$Dabe$,,$Coneral Journal,Crodit$],[\frac{01}{01}\frac{?}{2019},,,],[,,,],[,,,],[,,,]]$