Operators share output    LO3, 4 On 1 July 2020, Toowoomba Ltd entered into a joint operation agreement with Miles Ltd to manufacture stevedoring equipment. It was agreed that each party to the agreement would share the output equally. To commence the operation, contributions were as follows. • Toowoomba Ltd: cash of $2 000 000 and equipment having a $400 000 carrying amount and a fair value of $600 000 • Miles Ltd: cash of $1 800 000 and plant having a carrying amount of $900 000 and a fair value of $800 000 Miles Ltd revalued the plant it contributed to the joint operation prior to its transfer to the joint operation. Plant and equipment is depreciated (to the nearest month) in the joint operation’s books at 20% p.a. on cost. During December 2020, both parties contributed an additional $1 500 000 cash. The following information, in relation to the joint operation’s operations for the year ended 30 June 2021, was provided by the operations manager.

(a) Costs incurred for the year ended 30 June 2021 Wages $1 200 000 Raw materials 2 150 000 Overheads 1 860 000 Depreciation 470 000 5 680 000 Less: Cost of inventories 2 580 000 Work in progress at 30 June 2021 $3 100 000

(b) Receipts and payments for the year ended 30 June 2021 Payments Receipts Contributions $6 800 000 Plant (10 July 2020) $ 950 000 Wages 1 150 000 Accounts payable 1 980 000 Overhead costs 1 810 000 Operating expenses 440 000 $6 330 000 $6 800 000

(c) Assets and liabilities as at 30 June 2021 Dr Cr Cash $ 470 000 Raw materials 360 000 Work in progress 3 100 000 Inventories 580 000 Plant and equipment 2 350 000 Accumulated depreciation — plant and equipment $470 000 Accounts payable 530 000 Accrued expenses 100 000 Required Prepare the journal entries in the records of Toowoomba Ltd and Miles Ltd in relation to the joint operation for the year ended 30 June 2021.