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, 2016, O'Donnell invests a building worth $130,000 and equipment valued at $140,000 as well as $60,000 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 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 10 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 $4,000, whichever is larger. All remaining income is credited to Reese. Neither partner is allowed to withdraw funds from the partnership during 2016. Thereafter, each can draw $7,000 annually or 15 percent of the beginning capital balance for the year, whichever is larger. The partnership reported a net loss of $6,000 during the first year of its operation. On January 1, 2017, Terri Dunn becomes a third partner in this business by contributing $26.000 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 6.4 basis between Reese and Dunn, respectively Partnership income for 2017 is reported as $100,000. Each partner withdraws the full amount that is allowed. On January 1, 2018. Dunn becomes and sells her interest in the partnership with the consent of the other two partners) to Judy Postner. Poster pays $175,000 directly to Dunn. Net income for 2018 is $99.000 with the partners again taking their full drawing allowance Partnership income for 2017 is reported as $100,000. Each partner withdraws the full amount that is allowed. On January 1, 2018. Dunn becomes ill and sells her interest in the partnership with the consent of the other two partners) to Judy Postner. Postner pays $175,000 directly to Dunn. Net income for 2018 is $99,000 with the partners again taking their full drawing allowance. On January 1, 2019, 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. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required 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. (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 nur final answer to the nearest dollar amint Show less Date General Journal Credit 01/01/2016 Building Equipment Cash Goodwill O'Donnell, capital Reese, capital Debit 130,000 140,000 60,000 330,000 330,000 330,000 12/31/2016 Reese, capital O'Donnell, capital Income summary 37,000 6,000 01/01/2017 Cash Goodwill Dunn, capital 26.000 111,500 137,500 12/31/2017 O'Donnell, capital Reese, capital Dunn, capital O'Donnell, drawings 55,050 43,050 20,625 111,500 Goodwill Dunn, capital 137,500 12/31/2017 55,050 43,050 20,625 O'Donnell, capital Reese, capital Dunn, capital O'Donnell, drawings Reese, drawings Dunn, drawings 55,050 43,050 12/31/2017 100,000 Income summary O'Donnell, capital Reese, capital Dunn, capital 46,700 31,980 21,320 102 236 X 01/01/2018 Goodwill O'Donnell, capital Reese, capital Postner, capital 10.224 55,207 36.805 175.000 01/01/2018 Dunn, capital Reese, capital 175.000 Reese, capital 175,000 8 12/31/2018 55,331 49,671 26,250 O'Donnell, capital Reese, capital Postner, capital O'Donnell, drawings Reese, drawings Postner, drawings 55,331 49,671 x 26,250 12/31/2018 99,000 Income summary O'Donnell, capital Reese, capital Dunn, capital OOOOOOOOOOOOOOO 46,787 % 31,328 20,885 % 47,122 01/01/2019 Goodwill O'Donnell, capital Reese, capital Postner, capital 4,712 25,446 16,964 % 186,599 x 01/01/2019 Postner, capital Cash 186,599 $