Tom and Jerry decide to enter into a partnership agreement from 1 July 2021. Assets and liabilities brought into the partnership are shown below.

Tom Jerry

Carrying Fair Carrying Fair

Amount Value Amount Value

Cash	19,200	19,200	5,000	5,000
Inventory	4,000	3,800	3,800	3,800
Accounts Receivable	3,000	2,500	1,500	1,500
Equipment	65,000	55,000	30,000	25,000
Accum. Depreciation	5,500		5,000
Accounts payable	800	800
Bank loan	50,000	50,000

Because of Jerry’s exceptional talent, it is agreed that his capital amount will be credited to $50,000 in total.

During the year ended 30/6/2022 the following details apply:

• The partners use method 1 in their accounting

• Tom will receive a salary of $50,000 p.a. and Jerry a salary of $28,000 p.a.

• Partners will receive 8% p.a. interest on their opening capital balances

• Partners will be charged 9% p.a. on any drawings

• Tom makes drawings of $20,000 on 1 January 2022

• Jerry makes drawings of $15,000 on 1 March 2022

• Residual profits will be distributed to Tom and Jerry on the ratio of 1:2.

• Profit for the year was $76,000

• Financial year ends 30 June 2022

Required

Prepare the general journal entries upon the formation of the partnership.

Prepare a table showing the calculation of the distribution of profit to the partners as of 30 June 2022.

Answer rating: 100% (QA)

Bank Loan Accounts Payable Accum Depreciation Date Liabilitico 2019 50000 1800 5500 5000 Capitals of... View the full answer