On 1 October 2015, Dallas Lucas and Suzanne Foreman formed

On 1 October 2015, Dallas Lucas and Suzanne Foreman formed a partnership. Some business assets and the liabilities of Lucas were assumed by the partnership, and these are listed below at both carrying amounts and fair value.



Carrying amount


Fair value

Cash at bank

Marketable securities

Accounts receivable

Inventory

Equipment

Accounts payable

$

28 000

24 000

47 000

122 600

38 500

36 000



$

28 000

26 800

47 000

125 400

230 000

36 000











Foreman contributed a building worth $820 000, land worth $350 000, and a $456 000 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, Lucas invested $60 000 in the business and withdrew $45 000. Foreman invested $115 200 and withdrew $17 200. The partnership had a profit of $88 460. 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 2015.

C.    Prepare a statement of changes in partners’ equity for the year ended 30 September 2016.

Balance Sheet
Balance 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...

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