On 1 July 2015, McGregor and Roberts decided to amalgamate their businesses and to share profits equally. Financial information at that date was:

	McGregor			Roberts
Capital Accounts payable Bank overdraft	$	101 380 41 470   18 430		$	119 800 55 300
	$	161 280		$	175 100
Cash at bank Accounts receivable Inventory Furniture and fittings Equipment	$	61 280 46 080 26 260   27 660		$	59 900 46 080 69 120
	$	161 280		$	175 100

 At 1 July 2015, McGregor’s accounts receivable and inventory had fair values of $61 280 and $48 380 respectively, and Roberts’s accounts receivable and inventory had fair values respectively of $46 080 and $73 720. McGregor’s equipment was written down by 10%.

McGregor and Roberts negotiated to have equal capital balances of $150 000. 

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:

Net cash at bank had increased by Accounts receivable had decreased by Inventory had increased by Accounts payable had decreased by

$

23 040 10 120 36 860 27 650

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 2016 showing each partner’s share of profit/loss for the year.

C. Prepare the balance sheet of the partnership as at 30 June 2016.