Lucy Loiselle and Abby Ready formed a partnership on March 15. The partners agreed to inve...

Lucy Loiselle and Abby Ready formed a partnership on March 15. The partners agreed to invest equal amounts of capital. Loiselle invests her proprietorship’s assets and liabilities (credit balances in parentheses), as follows:

On March 15, Ready invested cash in an amount equal to the current market value of Loiselle’s partnership capital. The partners decided that Loiselle will earn 70% of partnership profits because she will manage the business. Ready agreed to accept 30% of the profits. During the period ended December 31, the partnership earns net income of $75,000. Loiselle’s drawings were $43,000, and Ready’s drawings totaled $29,000.

Requirements

1. Journalize the partners’ initial investments.

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2. Prepare the partnership balance sheet immediately after its formation on March 15.

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3. Journalize the closing of the Income summary and partner Drawing accounts on December 31.