On 1 July 2025, McGregor and Roberts decided to amalgamate their businesses and to share profits equally. Financial information at that date was as follows.

At 1 July 2025, McGregor’s accounts receivable and inventory had fair values of \($61280\) and \($48380\) respectively, and Roberts’s accounts receivable and inventory had fair values respectively of \($46080\) and \($73720.\) McGregor’s equipment was written down by 10%.
McGregor and Roberts negotiated to have equal capital balances of \($150000\).
After 1 year, the following were the only changes to the assets and liabilities, as compared with the position at the time of forming the partnership.

Depreciation still has to be charged on the furniture and fittings and on equipment at the rates of 10% and 15% respectively for the year. Cash drawings for the year were: McGregor, \($28800;\) Roberts, \($36240\).

Required

(a) Prepare journal entries to record the formation of the partnership.

(b) Prepare a statement of changes in partner’s equity as at 30 June 2026 showing each partner’s share of profit/loss for the year.

(c) Prepare the balance sheet of the partnership as at 30 June 2026.

Transcribed Image Text:

Capital Accounts payable Bank overdraft Cash at bank Accounts receivable Inventory Furniture and fittings Equipment McGregor $101 380 41 470 18430 $161280 61280 46 080 26260 Roberts $119 800 55 300 $175100 59 900 46 080 69 120 27 660 $161280 $175 100