Reference no: EM132419748

Problem: John Landis and Raymond Oliver formed a partnership on 1 July 2019, agreeing to share profits and losses in the ratio of 2:1. John contributed $30 000 in cash and land with a fair value of $180 000. Assets contributed to, and liabilities assumed by, the partnership from Raymond;s business at both carrying amout and fair value are shown below.

Carrying amount Fair value

Cash at bank 22 500 22 500

Accounts receivable 12 800 12 800

Inventory 24 600 23 800

Office equipment 76 000 62 000

Accounts payable 11 500 11 500

Bank loan 18 000 18 000

During the first year, John contributed an additional $12 000 in cash. The partnership's profit was $56 000. John withdrew $8000 and Raymond withdrew $16 000 in expectation of profits (ignore GST)

Required

Question 1: Prepare the journal entries to record each partner's initial investment

Question 2: Prepare the partnership's balance sheet as at 1 July 2019

Question 3: Prepare statement of changes in partners' equity for the year ended 30 June 2020, using method 2 for recording partners' equity accounts.