Accounting in organizations Hhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhhh

QUESTION 2 On 1 July 2014, Sandra and George decided to amalgamate their businesses and start a partnership, called Sandra and George Consulting Services. Their previous businesses financial information at that commencement of the partnership was: Sandra George Capital $ 101 500 Accounts payable 52 350 61 300 Bank overdraft 7 430 $ l6l 280 $ 175100 Cash at bank - $ 49 560 Accounts receivable $ 56 100 53 240 Inventory 41 680 72 300 Furniture and fittings 27 270 Equipment 46 970 Accumulate DepreciationEquipment (10,7401 At 1 July 2014, Sandra's accounts receivable and inventory had fair values of $55 000 and $39 503 respectively, and George's accounts receivable and inventory had fair values respectively of $46 MO and $70 000. Sandra's Furniture was just purchased on 1 July 2014 and the fair value was equal to its carrying amount and the equipment fair value was lO% lower than its carrying amount. The following details were included in the partnership agreement; Sandra and George negotiated to have equal capital balances of $l20 000. The end of the financial year to be 30 June. The interest on advances to be 7%. The profit or loss to be allocated as; A salary of $32,000 per year for Sandra and $26,500 for George. Interest of 6% to be allowed on the ending balance of capital Interest of 8% to be charged on partners' drawings .'>.W!9:- The residual profit or loss to be divided or borne by Sandra and George in the proportion of 2:3 respectively.After 2 years of operation, at the end of the financial year, the trial balance for the Sandra and George Consulting Services is as follows; Debit Credit Cash at Bank 182,300 Accounts Receivable 127,900 Inventory 230,000 Equipment 159,800 Accumulated Depreciation-Equipment l3,000 Goodwill Accounts Payable 95,500 ' Advance, Sandra 240,000 Sandra, Capital l95,500 George, Capital 210,000 Sandra Drawings 60,000 George, Drawings 45,000 Profit and loss summary 5 1.000 ' 805,000 805.000 Sandra made her advance on 1 June 2016 and is due for payment by 1 June 20l8. Sandra and George each withdrew $lS,000 on 1 November 2015; $l7,000 on 1 January 2016; and the remainder on 31 March 2016. Required a) Prepare the general journal entries to record the initial investment of both partners on 1 July 20l4. b) Prepare a schedule showing the distribution of the final balance in the profit and loss summary account to each partner, as at 30 June 2016 (based on the above agreed terms). c) Prepare the necessary generaljournal entries to close the profit and loss summary account and to distribute the profit to Sandra and George using method 2 as at 30 June 2016 (based on your answer in part b)