Terry and Craig share profits in the proportion of one‐third and two‐thirds respectively. On 1 July 2019, the equity accounts stood as follows.

The partners were entitled to 8% interest on capital, and Terry, as manager, was entitled to a salary of $30 000 p.a. During the year, Terry withdrew $12 000 in cash and Craig withdrew $17 000. The profits for the year ended 30 June 2020 were $68 000 before providing for interest on capital balances and for Terry’s salary.

Required

Prepare the Profit Distribution account and partners’ Retained Earnings accounts for the year ended 30 June 2020.

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Terry Craig Capital $80.000 $120000 Retained earnings 25 000 32 000