Problem Salem and Durham entered into a partnership to provide supply chain management and logistic services in the Silicon Valley region of California. In their agreed Articles of Partnership, the partners acknowledged the following: A. Sharing of profits and losses: i. Compensate each partner $75 per hour for their billable hourly consulting work performed. ii. Salem receives an additional $3,200 monthly as the partnerships Chief Operating Officer (COO); iii. Durham receives an additional $2,000 monthly as the partnerships Chief Technology Officer (CTO), iv. Any remaining profits or losses are divided equally between the partners. B. Each partner is permitted but not required to withdraw no more than $1,500 per month from the partnership and such withdrawals will be accounted for as direct reductions of the withdrawing partners capital balance. On January 1, 20x1, when they formed the partnership, each partners contributions were as follows: A. Salem invested cash of $125,000. B. Durham invested $125,000 in cash and she invested office equipment with a book value of $10,000 and fair value of $25,000. For fiscal year-ending 20x1, the total partnership's net income was $275,000. Additionally, in 20x1, Salem worked 1,200 billable partnership hours, and Durham worked 1,000 billable hours. Lastly, Salem withdrew $1,000 per month from the partnership throughout 20x1. Durham withdrew $1,500 per month throughout 20x1. Required A. Prepare the initial journal entry to establish the two partners investment in the partnership. B. For fiscal year-ending 20x1, prepare a schedule showing the allocation of 20x1 profit and losses and other partner compensation to each partners capital account. C. For fiscal year-ending 20x1, prepare a Statement of Partners Capital, in good form..

1. Problem
Salem and Durham entered into a partnership to provide supply chain management and logistic
services in the Silicon Valley region of California.
In their agreed Articles of Partnership, the partners acknowledged the following:
A. Sharing of profits and losses:
i. Compensate each partner $75 per hour for their billable hourly consulting work performed.
ii. Salem receives an additional $3,200 monthly as the partnerships Chief Operating Officer
(COO);
iii. Durham receives an additional $2,000 monthly as the partnerships Chief Technology Officer
(CTO),
iv. Any remaining profits or losses are divided equally between the partners.
B. Each partner is permitted but not required to withdraw no more than $1,500 per month from
the partnership and such withdrawals will be accounted for as direct reductions of the
withdrawing partners capital balance.
On January 1, 20x1, when they formed the partnership, each partners contributions were as
follows:
A. Salem invested cash of $125,000.
B. Durham invested $125,000 in cash and she invested office equipment with a book value of
$10,000 and fair value of $25,000.
For fiscal year-ending 20x1, the total partnership's net income was $275,000.
Additionally, in 20x1, Salem worked 1,200 billable partnership hours, and Durham worked
1,000 billable hours.
Lastly, Salem withdrew $1,000 per month from the partnership throughout 20x1. Durham
withdrew $1,500 per month throughout 20x1.
Required
A. Prepare the initial journal entry to establish the two partners investment in the partnership.
B. For fiscal year-ending 20x1, prepare a schedule showing the allocation of 20x1 profit and
losses and other partner compensation to each partners capital account.

2. C. For fiscal year-ending 20x1, prepare a Statement of Partners Capital, in good form.