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The partnership of Lau & Min started the fiscal year on January 1, 2022 with...

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Accounting

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The partnership of Lau & Min started the fiscal year on January 1, 2022 with capital balances as follows: L. Lau $43,500 and M. Min $41,200. Lau & Min had a very disappointing fiscal year ended December 31, 2022. Before closing the Income Summary and Drawings accounts, the balance in the Income Summary account was a debit of $52,000. The poor results of the year are due to the recording of a loss from a lawsuit during the year. By the end of May, 2022, the partners determined that available cash in the business would be small, so they stopped withdrawing funds. As of May 31, 2022, L. Lau had withdrawn $6,900 and M. Min had withdrawn $8.900. No other withdrawals were made for the remainder of the year. Once the judgement against the partnership was issued, additional cash had to be invested to make a payment on the settlement. On October 15, 2022, Lau and Min each invested $25,000 cash into the partnership, The partnership agreement of Lau & Min provides for the division of any profit or loss using the following formula: 1. A salary allowance of $28,800 to Lau and $31,300 to Min. An interest allowance of 5% on capital balances at the beginning of the year 2. 3. The remainder to be divided between Lau & Min on a 3:2 basis

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