Question:
Sharp and Townson had capital balances of $60,000 and $120,000, respectively on January 1 of the current year. On May 8, Sharp invested an additional $10,000 in the partnership. During the year, Sharp and Townson withdrew $25,000 and $45,000, respectively. After closing all expense and revenue accounts at the end of the year, Income Summary has a credit balance of $90,000, that Sharp and Townson have agreed to split on a 2:1 basis, respectively.
a. Journalize the entries to close the income summary account and the drawing accounts. For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".
b. Prepare the statement of owner's equity for the current year. If an amount box does not require an entry, leave it blank.