On 1 January 2026 Rachelle Zalmstra and Jay Muscat formed a partnership, agreeing to share profits and losses equally. Rachelle contributed \($185\) 300 in cash, and plant and equipment with a fair value of \($277\) 900. Assets contributed to and liabilities assumed by the partnership from Jay 's business at both carrying amount and fair value are shown below.

Required

(a) Prepare the journal entries to record each partner’s initial investment.

(b) Prepare the partnership’s balance sheet as at 1 January 2026.

(c) Prepare a statement of changes in partners’ equity for the year ended 31 December 2026, using method 1 for recording partners’ equity accounts.

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Carrying amount Fair value Cash at bank $29 200 $29 200 Accounts receivable 52 100 52 100 Inventory 75 300 70 400 Building 510 000 1112 000 Accounts payable 42 800 42 800 Bank loan 416 000 416 000 During the first year, Rachelle contributed an additional $56 000 in cash. The partnership's profit was $222 300. Rachelle withdrew $37 000 and Jay withdrew $42 000 in expectation of profits (ignore GST).