John and Marylynne agree to form a partnership on 16 September 2017 to supply first-aid kits to motor vehicle dealers. They agree on the following market values given to them by an independent valuer:

• John’s contribution
–– Cash $10 000
–– Inventory $18 000
–– Accounts receivable $7500 (less allowance for doubtful debts $1250)
–– Computer table $1200

• Marylynne’s contribution
–– Cash $20 000
–– Inventory $2000
–– Accrued expenses $800

a. Prepare the initial balance sheet for John and Marylynne as at 16 September 2017.

b. What would happen to the balance sheet if, over the following four weeks, John and Marylynne made a cash profit of $14000.