The KL Partnership is owned equally by Kayla and Lisa. At the beginning of the year, Kaylas basis is $20,000 and Lisas basis is $16,000. Partnership debt did not change from the beginning to the end of the tax year. KL reported the following income and expenses for the current tax year:

Sales revenue $150,000

Cost of sales 80,000

Distribution to Lisa 15,000

Depreciation expense 20,000

Utilities 14,000

Rent expense 18,000

Long-term capital gain 6,000

Payment to Mercy Hospital for Kaylas medical expenses 12,000

Compute the answers to Chapter 21 problem 49. When complete you will Prepare only the Form 1065 Schedule M-1 and M-2

Assume that the begining balance of the partner's capital account equals the beginning basis for the partner's.