Reference no: EM132565517
Question - 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 amount 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 -
1. Prepare the journal entries to record each partner's initial investment.
2. Prepare the partnership's balance sheet as at 1 July 2019.
3. Prepare statement of changes in partners' equity for the year ended 30 June 2020, using method 2 for recording partners' equity accounts.
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