On 1 October 2025, Kevin Lindsay and Sharon Foster formed a partnership. Some business assets and the
Question:
On 1 October 2025, Kevin Lindsay and Sharon Foster formed a partnership. Some business assets and the liabilities of Lindsay were assumed by the partnership, and these are listed below at both carrying amounts and fair value.
Foster contributed a building worth \($820000,\) land worth \($350000,\) and a \($456000\) mortgage was taken over by the partnership. They agreed to share profits and losses in the ratio of 1:2. During the first year of the partnership, Lindsay invested \($60000\) in the business and withdrew \($45000.\) Foster invested \($115200\) and withdrew \($17200.\) The partnership had a profit of \($88460.\) Retained Earnings accounts are not used.
Required
(a) Prepare the journal entries to record the initial investments of both partners. (Ignore GST.)
(b) Prepare a balance sheet as at 1 October 2025.
(c) Prepare a statement of changes in partners’ equity for the year ended 30 September 2026.
Step by Step Answer:
Accounting
ISBN: 9780730382737
11th Edition
Authors: John Hoggett, John Medlin, Keryn Chalmers, Claire Beattie