Kelly Freeley and Brendan Hart form a partnership on March 1, 2016, contributing $56,250 and $18,750, respectively. The partnership had net income of $160,000. Based on the partnership agreement, Kelly Freeley’s share of net income was $94,400 and Brendan Hart’s share was $65,600. Kelly Freeley and Brendan Hart each withdrew cash of $30,000 for personal use during the year.
1. Journalize the entry to close net income to the partners.
2. Journalize closing the partners’ withdrawal accounts. Explanations are not required.
3. Calculate the balances in each partner’s capital account after allocation of net income and partners’ withdrawals of cash. (Assume the partnership’s accounting year began on January 1, 2016, and ended on December 31, 2016.)