On March 1, 2009, Eckert and Kelley formed a partnership. Eckert contributed $83,000 cash and Kelley contributed land valued at $66,400 and a building valued at $96,400. The partnership also assumed responsibility for Kelley's $77,800 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert is to receive an annual salary allowance of $30,500, both are to receive an annual interest allowance of 11% of their beginning-year capital investment, and any remaining income or loss is to be shared equally. On October 20, 2009, Eckert withdrew $32,000 cash and Kelley withdrew $25,000 cash. After the adjusting and closing entries are made to the revenue and expense accounts at December 31, 2009, the Income Summary account had a credit balance of $86,000.
Requirement 1: Prepare journal entries to record the following:
(a) The partners' initial capital investments.
(b) Their cash withdrawals.
(c) The December 31 closing of both the Withdrawals and Income Summary accounts.
Requirement 2: Determine the balances of the partners' capital accounts as of December 31, 2009.