Unincorporated joint operation  LO3, 4 On 1 July 2018, Esperence Ltd entered into a joint agreement with Walpole Ltd to establish an unincorporated joint operation to manufacture timber‐felling equipment. It was agreed that the output of the operation would be shared in the proportions Esperence Ltd 60% and Walpole Ltd 40%. To commence the operations, contributions were as follows. • Esperence Ltd: cash of $1 100 000 and equipment having a carrying amount of $300 000 and a fair value of $400 000 • Walpole Ltd: cash of $600 000 and plant having a carrying amount of $450 000 and a fair value of $400 000 Walpole Ltd revalued the plant it contributed to fair value prior to its transfer to the joint operation. Plant and equipment was depreciated (to the nearest month) in the joint operation’s books at 20% p.a. on cost. During December 2018, an additional $1 000 000 cash was contributed by the operators in the same proportion as their initial contributions. The following information, in relation to the joint operations for the year ended 30 June 2019, was provided by the operation manager.

(a) Costs incurred for the year ended 30 June 2019 Wages $ 400 000 Raw materials 1 200 000 Overheads 650 000 Depreciation 205 000 2 455 000 Less: Cost of inventories 2 005 000 Work in progress at 30 June 2019 $ 450 000

(b) Receipts and payments for year ended 30 June 2019 Payments Receipts Contributions $2 700 000 Plant (3 January 2019) $ 450 000 Wages 350 000 Accounts payable 980 000 Overhead costs 610 000 Operating expenses 40 000 $2 430 000 $2 700 000

(c) Assets and liabilities at 30 June 2019 Dr Cr Cash $ 270 000 Raw materials 100 000 Work in progress 450 000 Inventories 255 000 Plant and equipment 1 250 000 Accumulated depreciation — plant and equipment $205 000 Accounts payable 320 000 Accrued expenses — wages and overheads 90 000 Required Prepare the journal entries in the records of Esperence Ltd in relation to the joint operation for the year ended 30 June 2019. (Round all amounts to the nearest dollar and show all relevant workings.)