Francine Steele and Shaun Dunn formed a partnership on 1 July 2019. Some of Steele’s business assets and liabilities were assumed by the partnership, and these are listed below at both carrying amounts and fair value.

Dunn contributed a commercial property to the partnership that had a fair value of $670 000 which was financed by a mortgage of $220 000. They agreed to share profits and losses evenly.

During the first year of the partnership, Steele invested $80 000 in the business and withdrew $20 000. Dunn invested $82 000 and withdrew $24 000. The partnership had a profit of $132 800. Retained Earnings accounts are not used.

Required

(a) Prepare the general journal entries to record the initial investments of both partners (assume no GST).

(b) Prepare a balance sheet as at 1 July 2019.

(c) Prepare a statement of changes in partners’ equity for the year ended 30 June 2020.

Transcribed Image Text:

Cash at bank Accounts receivable Inventory Equipment Accounts payable Loan Carrying amount $ 62000 34000 98 600 320000 24000 80000 Fair value $ 62000 34000 96000 360 000 24000 80000