Partnership formation Thomas and James, who were operating separate competing businesses, decided on 1 July 2019 to form a partnership by contributing cash, assets and liabilities of their respective businesses. At that date the fair values of the assets and liabilities were as set out below. Thomas James Cash at bank $90,000 $100,000 Accounts receivable $1,200 $7,500 Inventory $45,000 $40,000 Plant and equipment $90,000 $70,000 Accounts payable $12,500 $8,000 Required 1. Assuming that Thomas and James agree that their capitals should be equal to the fair value of the net assets contributed, prepare general journal entries to record the formation of the partnership. 2. If Thomas and James agree that their respective capital should be $230 000 each, show the general journal entries to establish the partnership