2 Antonio and Gayas are fierce competitors who sell hunting equipment. They finally decided to join forces in order to increase their business and reduce costs. An agreement is reached between the two to begin operations as a partnership on Mar 1, 2021. Antonio and Gayas have decided to share profits or losses in the ratio of 60:40 respectively. The statements of financial position of Antonio and Gayas as at Mar 1, 2021 are as follows: Antonio Gayas Cash 42,000 30,000 Accounts receivable 389,200 169,200 Allowance for doubtful accounts (22,400) (14,400) Merchandise inventory 461,600 300,800 Prepaid rent 6,000 Office supplies 30,400 4.000 Land 40,000 Building 128,000 Accumulated depreciation - building (32,000) Office equipment 24,000 62,000 Accumulated depreciation - office equipment (6,000) (13,200) Repair equipment 172,000 Accumulated depreciation - repair equipment (68,000) Total assets 1,158,000 544,400 Notes payable 120,000 Accounts payable 170,000 111,600 Mortgage payable 200,000 Antonio Capital 668,800 Gayas Capital 432,800 Total liabilities and owners' equity 1,158,800 544,400 The name of the partnership will be Antonio and Gayas Hunting Gears. The partners have agreed to effect the following adjustments: a. Antonio's merchandise inventory is to be reduced by 105,200. The inventory of Gayas will be increased by 7,200. b. The following are the fair market values of the various assets: Land Building Office equipment Repair equipment Antonio Gayas 108,000 192,000 16,000 40,000 124,000 c. One-half of the notes payable of Antonio are personal notes. All other liabilities of the partners are assumed by the partnership. d. The prepaid rent in the books of Gayas will be consumed by the partnership. REQUIRED: 1. Prepare the necessary adjusting journal entries in the books of Antonio. (6 pts) 2. Prepare the necessary adjusting journal entries in the books of Gayas. (2 pts) 3. Calculate Antonio's capital after adjustment. (4pts) 4. Calculate Gayas' capital after adjustment. (3pts)