Penny and Lane formed a partnership on 1 July 2019 with initial capital balances of $200 000 and $220 000 respectively. For the year ended 30 June 2020, the Profit or Loss Summary account disclosed a final credit balance of $180 000.

Required

(a) Prepare the closing entry to transfer the profit disclosed in the Profit or Loss Summary account to the Profit Distribution account under method 1 and method 2.

(b) Prepare the closing general journal entry to distribute the profit to Penny and Lane, assuming they have agreed to share profits in the ratio of 3:2.

(c) Show how the partners’ equity accounts will appear in the balance sheet of the partnership at 30 June 2020.