Steve Reese is a well$-$known Interlor 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 $$106,000$ and

equlpment valued at $$48,000$ as well as $$46,000$ in cash. Although Reese makes no tanglble contribution to the parthership, he will

operate the business and be an equal partner In the beginning capital 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 balance for the year.

O'Donnell will also have added to his capital account $15$ percent of partnership Income each year $($without regard for the preceding

Interest figure$)$ or $$6,000,$ whichever is larger. All remaining income is credited to Reese.

Nelther partner is allowed to withdraw funds from the partnership during $2022$ Thereafter, each can draw $$8,000$ annually or $20$

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 $1,2023,$ Terrl Dunn becomes a third

parther In this business by contributing $$30,000$ cash to the partnership. Dunn recelves 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, respectlvely.

Partnership income for $2023$ is reported as $$76,000.$ 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

Postiner. Posther pays $$95,000$ directly to Dunn. Net Income for $2024$ is $$73,000$ with the parthers agaln taking thelr 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 recelve cash in an amount equal to the recorded capltal balance at that time plus $10$

percent.

Required:

a$.$ Prepare journal entrles 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 entrles to record the prevlous 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.

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.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Round your answers to

the nearest dollar amount.

Journal entry worksheet

Record the initial investment of assets by partners.

$1.$ record the initial investment of assets by partners

$2.$ record the distribution of net income to partners

$3.$ record the admittance of Dunn into the partnership

$4.$ record entry to close drawings accounts

$5.$ record the distribution of net income to partners

$6.$ record the admittance of Postner into the partnership

$7.$ record entry to close drawings accounts

$8.$ record the distribution of net income to partners

$9.$ record the cash paid to the withdrawing partner