[Study Case]

Ping and Juno decide to form a partnership on 30 June 2020. They secure the services of Timothy Legal to draw up their partnership agreement as follows.

Ping is to contribute: - his car, the fair value of which is $32,000 - property with a book value of $120,000 but revalued to $150,000 - a mortgage of $80,000; this was secured over the property and the partnership has agreed to assume this liability.

June is to contribute: - cash totaling $25,000 - office equipment with a market value of $45,000

It is also agreed that Ping will act as a manager with an annual salary of $65,000 to be allocated at the end of each year. Profits or losses will be divided between Ping and Juno in proportions 2/3 and 1/3 respectively.

Gross profit for the year ended 30 June 2021 is $165,000, with operating expenses of $105,000. Ping withdrew $19,500 and Juno withdrew $4,000 during the year.

Questions:

a. Prepare the statement of the financial position of the partnership on its formation (30 June 2020). b. Calculate each partner's share of profit for the year ended 30 June 2021