Anthony Chu and Adrian Tan formed a partnership on 1 January 2015, agreeing to share profits and
Question:
Anthony Chu and Adrian Tan formed a partnership on 1 January 2015, agreeing to share profits and losses equally. Anthony contributed $80 000 in cash and plant and equipment with a fair value of $120 000. Assets contributed to and liabilities assumed by the partnership from Adrian’s business at both carrying amount and fair value are shown below.
Carrying amount | Fair value | ||||||
Cash at bank Accounts receivable Inventory Building Accounts payable Bank loan | $ | 12 600 22 500 32 500 220 000 18 500 180 000 | $ | 12 600 22 500 30 400 480 000 18 500 180 000 | |||
During the first year, Anthony contributed an additional $24 000 in cash. The partnership’s profit was $96 000. Anthony withdrew $16 000 and Adrian withdrew $18 000 in expectation of profits (ignore GST).
Required
A. Prepare the journal entries to record each partner’s initial investment.
B. Prepare the partnership’s balance sheet as at 1 January 2015.
C. Prepare a statement of changes in partners’ equity for the year ended 31 December 2015, using method 1 for recording partners’ equity accounts.
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
Step by Step Answer:
A Cash at Bank 80 000 Plant and Equipment 120 000 Chu Capital 200 000 Cash at Bank 12 600 Accounts R...View the full answer
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett
