John Landis and Raymond Oliver formed a partnership on 1 July 2015, agreeing to share profits and
Question:
John Landis and Raymond Oliver formed a partnership on 1 July 2015, agreeing to share profits and losses in the ratio of 2:1. John contributed $30 000 in cash and land with a fair value of $180 000. Assets contributed to and liabilities assumed by the partnership from Raymond’s business at both carrying amount and fair value are shown below:
Carrying amount | Fair value | ||||||
Cash at bank Accounts receivable Inventory Office equipment Accounts payable Bank loan | $ | 22 500 12 800 24 600 76 000 11 500 18 000 | $ | 22 500 12 800 23 800 62 000 11 500 18 000 | |||
During the first year, John contributed an additional $12 000 in cash. The partnership’s profit was $56 000. John withdrew $8000 and Raymond withdrew $16 000 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 July 2015.
C. Prepare a statement of changes in partners’ equity for the year ended 30 June 2016, using method 2 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 30 000 Land 180 000 Landis Capital 210 000 Cash at Bank 22 500 Accounts Receivable 12 ...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
