On 1 July 2019, Tully Ltd and Cooktown Ltd signed a contractual agreement to form a joint operation for the manufacture of kitchen products. The agreement provided that Cooktown Ltd would contribute $ 241,000 in cash while Tully Ltd would provide $ 39,900 in cash and manufacturing equipment currently held by Tully Ltd that had a fair value of $ 199,900 . The equipment was currently recorded by Tully Ltd at a carrying amount of $ 180,000 , net of accumulated depreciation of $ 30,100 .

The agreement provided that each operator would receive half of the output of the joint operation. Depreciation on equipment is charged at 20% p.a. on cost, based on the expected pattern of use in the joint operation.

Financial information provided by the joint operation at 30 June 2020 was as follows.

Statement of financial Position (partial)
Cash	$ 56,000	Accounts payable	$ 39,900
Raw materials	32,000	Accrued wages	15,900
Inventory (undistributed)	12,900	Loan	200,000
Work in progress	32,000
Equipment	399,900
Accumulated depreciation	( 79,980 )
	$ 452,820		$ 255,800

Cash receipts and payments
	Payments	Receipts
Contributions		$ 280,900
Loan		200,000
Purchase of raw materials	64,000
Wages	96,000
Purchase of equipment (2 July 2019)	200,000
Other expenses	64,000
	$530,000	$ 480,900

Costs incurred
Wages	$ 111,900
Raw materials	72,000
Overheads including depreciation	144,000
	327,900
Cost of inventory	( 296,780 )
Work in progress at 31 July 2020	$ 31,120

Required Prepare the journal entries in the records of Tully Ltd in relation to the joint operation for the year ending 30 June 2020.

1 July 2019

Account titles and explanation	Debit	Credit

30 June 2020

Account titles and explanation	Debit	Credit

Account titles and explanation	Debit	Credit

Click if you would like to Show Work for this question:

Open Show Work