In the early part of 2018, the partners of Hugh, Jacobs, andThomas sought assistance from a local accountant. They had begun anew business in 2017 but had never used an accountant’s services.Hugh and Jacobs began the partnership by contributing $170,000 and$120,000 in cash, respectively. Hugh was to work occasionally atthe business, and Jacobs was to be employed full-time. They decidedthat year-end profits and losses should be assigned as follows:Each partner was to be allocated 10 percent interest computed onthe beginning capital balances for the period. A compensationallowance of $5,000 was to go to Hugh with a $27,000 amountassigned to Jacobs. Any remaining income would be split on a 4:6basis to Hugh and Jacobs, respectively. In 2017, revenues totaled$195,000, and expenses were $158,000 (not including the partners’compensation allowance). Hugh withdrew cash of $10,000 during theyear, and Jacobs took out $15,000. In addition, the business paid$6,500 for repairs made to Hugh’s home and charged it to repairexpense. On January 1, 2018, the partnership sold a 15 percentinterest to Thomas for $58,000 cash. This money was contributed tothe business with the bonus method used for accounting purposes.What journal entries should the partnership have recorded onDecember 31, 2017? What journal entry should the partnership haverecorded on January 1, 2018?