(Accounting for a partnership, LO 1) In July 2006 Mr. Irving and Ms. Ruth formed a partnership to offer consulting services. Mr. Irving contributed $20,000 in cash to the partnership and Ms. Ruth contributed non-cash assets to the partnership with a market value of $50,000. During its first year of operations the partnership earned revenues of $92,000 and incurred expenses of $50,000. Mr. Irving and Ms.

Ruth agreed to divide the profits of the partnership in proportion to the value of their initial contributions. During the year Mr. Irving withdrew $5,000 in cash from the partnership and Ms. Ruth withdrew $7,000 in cash. The partnership’s first year end is December 31, 2006.

Required:

a. Record the journal entries required to record formation of the partnership.

b. Prepare the statement of partners’ capital on December 31, 2006.