The partnership of Jordan and O'Neal began business on January 1, 20X7. Each partner contributed the following assets (the noncash assets are stated at their fair values on January 1, 20X7): Cash Inventories Land Equipment Jordan $ 61,900 81,200 -0- 101,100 O'Neal $ 50,700 -0- 131,700 -0- The land was subject to a $51,200 mortgage, which the partnership assumed on January 1, 20X7. The equipment was subject to an installment note payable that had an unpaid principal amount of $21,400 on January 1, 20X7. The partnership also assumed this note payable. Jordan and O'Neal agreed to share partnership income and losses in the following manner: Interest on beginning capital balances Salaries Remainder Jordan 3% $ 13,200 60% O'Neal 3% $13, 200 40% During 20X7, the following events occurred: 1. Inventory was acquired at a cost of $30,800. At December 31, 20X7, the partnership owed $6,200 to its suppliers. 2. Principal of $6,000 was paid on the mortgage. Interest expense incurred on the mortgage was $1,900, all of which was paid by December 31, 20X7. 3. Principal of $4,000 was paid on the installment note. Interest expense incurred on the installment note was $2,100, all of which was paid by December 31, 20X7. 4. Sales on account amounted to $156,500. At December 31, 20X7, customers owed the partnership $22,600. 5. Selling and general expenses, excluding depreciation, amounted to $34,400. At December 31, 20X7, the partnership owed $6,800 of accrued expenses. Depreciation expense was $6,900. 6. Each partner withdrew $230 each week in anticipation of partnership profits. 7. The partnership's inventory at December 31, 20X7, was $20,400. 8. The partners allocated the net income for 20X7 and closed the accounts. Additional Information On January 1, 20X8, the partnership decided to admit Hill to the partnership. On that date, Hill invested $116,320 of cash into the partnership for a 20 percent capital interest. Total partnership capital after Hill was admitted totaled $466,000. Required: a. Prepare journal entries to record the formation of the partnership on January 1, 20X7, and to record the events that occurred during 20X7. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round the final answers to nearest dollar amount.) Answer is complete and correct. Credit No 1 Transaction a. General Journal Cash Inventory Land Equipment Mortgage payable Installment note payable Jordan, Capital | O'Neal, Capital Debit 112,600 81,200 131,700 101,100 OOOOOO 51,200 21,400 222,800 131,200 Answer is complete but not entirely correct. No General Journal Credit Event 01 Debit 30,800 Inventory Cash Accounts payable 24,600 6,200 Mortgage payable Interest expense 6,000 1,900 Cash 7,900 Installment note payable Interest expense Cash 4,000 2,100 6,100 Accounts receivable Cash Sales 22,600 133,900 156,500 (a)05 34,400 Selling and general expenses Cash 27,600 6,800 Accrued expenses payable (b)05 6.900 Depreciation expense Accumulated depreciation 6,900 Jordan, Drawing O'Neal, Drawing Cash 11,960 11,960 23,920 H 07 Sales 156,500 Income summary 156,500 (a)08 91,600 Cost of goods sold Inventory 91,600 (b)08 136,900 Income summary Cost of goods sold Selling and general expenses Depreciation expense Interest expense 91,600 34,400 6,900 4,000 (c)08 19,600 Income summary Jordan, Capital O'Neal, Capital 11,760 X 9,800 id)08 11,960 11,960 Jordan, Capital O'Neal, Capital Jordan, Drawing O'Neal, Drawing 11,960 11,960 b. Prepare the income statement for the Jordan-O'Neal Partnership for the year ended December 31, 20X7. Answer is complete and correct. $ 156,500 JORDAN - O'NEAL PARTNERSHIP Income Statement For the Year Ended December 31, 20X7 Sales Less: Cost of Goods Sold: Inventory, January 1 81,200 Purchases 30,800 0 Goods Available for Sale $ 112,000 Less: Inventory, December 31 20,400 Gross Profit Less: Selling and general expenses $ 34,400 Less: Depreciation expense 6.900 0 Operating income Nonoperating expense - Interest Net Income 91,600 64,900 $ $ (41,300) 23,600 4,000 $ 19,600 c. Prepare a balance sheet for the Jordon-O'Neal Partnership at December 31, 20X7. (Round the final answers to nearest dollar amount.) * Answer is complete but not entirely correct. JORDAN - O'NEAL PARTNERSHIP Balance Sheet At December 31, 20X7 Assets Cash Accounts receivable Inventory Land Equipment (net) 156,500 X 22.600 20,400 131,700 94,900 OOOOOOOOO $ 426,100 Total Assets Liabilities and Capital Liabilities: Accounts payable Accrued expenses payable Installment note payable Mortgage payable TO 6.200 6,800 17,400 45,200 0 75,600 Total liabilities $ Capital: Jordan, Capital O'Neal, Capital $ 222,800 131,200 0 Total capital Total Liabilities and Capital 354,000 429,600 $ d. Prepare the journal entry for the admission of Hill on January 1, 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete but not entirely correct. No Event General Journal Debit Credit 1 116,320 0X Cash Jordan, Capital O'Neal, Capital Hill, Capital 0X OX