Richard, Barry and Andrew decided to enter into a partnershipagreement as from 1st July 2018, some of the provisionsof which were as follows.
1. Richard to contribute$24000 cash, inventory the fair value of which was $51000, plantand machinery $94320, accounts receivable totalling $15240
2. Barry to contribute$45000 cash and act as manager for the business at an annual salaryof $38400 to be allocated to him at the end of each year.
3. Andrew to contribute$19800 cash, land $144000, premises $288000, furniture and fittings$48600, and motor vehicles $37800. A mortgage of $216000 securedover the premises was outstanding and the partnership agreed toassume the mortgage.
4. Profits or losses ofthe firm to be divided between or borne by Richard, barry andAndrew in the proportion of 2:1:3 respectively.
5. Interest to be allowedat 8% p.a. on the capital contribution by the partners. Interest at10% p.a. to be charged on partners’ drawings.
6. During the year ended30 June 2019, the income of the partnership totaled $144960, andthe expenses (excluding interest on capital and drawings andBarry’s salary) amounted to $51600.
7. Richard withdrew $14400on 1 October 2018 and $9600 on 1 January 2019; Barrie withdrew$4800 only on 1 April 2019; Andrew withdrew $12000 on 30 June2019.
Required
A) Prepare generaljournal entries necessary to open the records of thepartnership.
B) Prepare thebalance sheet of the partnership immediately after formation.
C) Prepare a ProfitDistribution account for the year ended 30 June 2019.
