Cathy, Tim and Lucas started a partnership online retailing business as from 1 January 2022. Theagreement set out the following basic arrangements:Cathy to contribute $12 000 in account receivables and inventory valued at $8 000. She alsocontributed computers valued at $10 000 on her record. The fair value of these computers was $2000 lower than Cathy's booking record on 1 January 2022.Tim to contribute $26 000 in cash and office furniture, which originally cost $35 500. Basedon Tim's accounting record, the accumulated depreciation of office furniture showed $15 000. Thebank loan associated with office furniture is $10 000.Lucas to contribute inventory valued at $24 750 and to act as managing partner at a salary of$20 000 per year.Interest to be allowed at 5% p. a. on the capital contribution by the partners. Residual profitsor losses to be shared equally among three partners.Ignore GSTRequired1)Prepare the journal entries necessary to open the records of the partnership.2) Assuming that the partnership makes a profit of $95 000 for the year ended 30 June 2022,prepare the journal entries to record the allocation of profit. Retained Earnings accounts are notused.

Partnership firm is where two or more person come together to form a business. And they divide their…

1) Prepare the journal entries necessary to open the records of the partnership. 2) Assuming that the partnership makes a profit of $95 000 for the year ended 30 June 2022, prepare the journal entries to record the allocation of profit. Retained Earnings accounts are not used.

1) Prepare the journal entries necessary to open the records of the partnership. 2) Assuming that the partnership makes a profit of $95 000 for the year ended 30 June 2022, prepare the journal entries to record the allocation of profit. Retained Earnings accounts are not used.

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter21: Partnerships

Section: Chapter Questions

Problem 3BCRQ

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