Reference no: EM133091316

Question - In the early part of 2015, the partners Hugh, Jacobs, and Thomas sought assistance from a local accountant. They had begun a business in 2014 but had never used an accountant's services. Hugh and Jacobs had begun the partnership by contributing $150,000 and $100,000 cash respectively. Hugh was to work occasionally in the business, and Jacobs was to be employed full time. They decided that year end profits/losses should be assigned as follows:

Each partner was to be allocated 10 percent interest computed on the period's beginning capital balance

Hugh would receive compensation of $5,000 and Jacobs would receive $25,000

Any remaining income would be split 4:6 to Hugh and Jacobs respectively. In 2014, revenues were $175,000, and expenses (not including compensation) were $146,000. Hugh withdrew $9,000 cash,, while Jacobs withdrew $14,000. In addition the business charged $7,500 to repairs expense for repairs made to Hugh's home.

On January 1, 2015, the partnership sold a 15% interest to Thomas for $64,000 cash. This money was contributed to the business with the bonus method used for accounting.

What journal entries should be recorded on December 31, 2014?

What journal entries should be recorded on January 1, 2015?