Ruby and Portia, the proprietors of a consulting business, decided to convert their business into a limited company known as Straight Up Ltd. The following was the statement of financial position for internal purposes at the date of the proposed conversion, 1 July 2025.

Required

(a) Prepare journal entries (in general journal form) for Straight Up Ltd up to and including 1 September 2025.

(b) Show the statement of financial position of the company as at 1 September 2025. Follow the requirements of IAS 1/AASB 101.

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Current liability Accounts payable Non-current liability Mortgage payable Ruby and Portia Statement of financial position as at 30 June 2025 Non-current assets (net) $ 15 000 Freehold premises Equipment $ 40 000 18 000 20 000 Fixtures fittings and 12.000 $ 70 000 Equity Current assets Ruby, Capital $45 000 Accounts 22 000 receivable Portia, Capital 45 000 90 000 Cash at bank 5 000 Inventory 28 000 55 000 $ 125 000 $ 125 000 Straight Up Ltd was registered on 1 July 2025. The purchase agreement provided that the assets other than cash at bank were to be taken over at the following fair values. Freehold premises Equipment Accounts receivable less 10% Inventory Fixtures and fittings $ 60 000 18 000 25 000 10 000 Ruby and Portia were to pay the accounts payable and discharge the mortgage payable. As consideration for the sale they were to receive $40 000 in cash 7 days after the allotment of shares issued to the public and on 31 August 60 000 fully paid ordinary shares and 40 000 fully paid 10% preference shares, valued at $1 per share.