Tom and Julie formed a management consulting partnership on January 1, 2008. The fair value of the net assets invested by each partner follows:

During the year, Tom withdrew $15,000 and Julie withdrew $12,000 in anticipation of operating profits. Net profit for 2008 was $50,000, which is to be allocated based on the original net capital investment.

Required:
A. Prepare journal entries to:
(1) Record the initial investment in the partnership.
(2) Record the withdrawals.
(3) Close the Income Summary and Drawing accounts.
B. Prepare a statement of changes in partners€™ capital for the year ended December31,

Transcribed Image Text:

Tom ulie $13,000 $12,000 6,000 800 Cash Accounts receivable Office supplies Office equipment Land Accounts payable Mortgage payable 8,000 2,000 30,000 30,000 5,000 18,800 2,000