uired: a. Prepare journal entries necessary to open the records of the partnership.
Aishah, Balan and Chong decided to enter into a
i . Aishah to contribute $20,000 cash, inventory the fair value of which was $42,500, plant and machinery $78,600,
ii. Balan to contribute $37 500 cash and act as manager for the business at an annual salary of $32,000 to be allocated to him at the end of each year.
iii. Chong to contribute $16,500 cash, land $120,000, premises $240,000, funiture and fittings $40,500, motor vehicles $31,500. A mortgage of $180.000 secured over the premises was outstanding and the partnership agreed to assume the mortgage.
iv .
V. Interest to be allowed at 8% p.a. on the capital contribution by the partners. Interest at 10% p.a. to be charged on partners' drawings.
During the year ended 30 June 2020, the income of the partnership amounting to $120 800, and the expenses amounting to $43,000. Aishah withdrew $12,000 on 1 October 2019 and $8,000 on 1 January 2020; Balan withdrew $4,000 only on 1 April 2020; Chong withdrew $10,000 on 30 June 2020.
Required:
a. Prepare
b. Prepare a Profit Distribution account for the year ended 30 June 2020.
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