QUESTION 1 On 3 January 2017, Jess and Joan agreed to form a partnership in a Modelling Agency Service and agreed to use 31 December as the end of financial year. They agreed to share profits and losses based upon their capital balance after allowing for salaries per annum of $22,000 to Jess and $28,000 to Joan, and 5% interest per annum on capital. Jess invested $350,000 cash and Joan brought her business into the partnership as follows: Cash Accounts Receivable Office Supplies Equipment Accumulated Depreciation Equipment Building Accumulated Depreciation-Building Accounts Payable Bank Loan 15,000 20,000 8,000 50,000 (10,000) 500,000 (150,000) 20,000 125,000 Based on estimation and existing market prices, Jess and Joan agreed to value the assets as follows: 1) Accounts Receivable $15,000 2) Office Supplies $6,000 3) Equipment $45,000 4) Building $514,000 Required (show all workings): a) Prepare the required journal entries to record the formation of the partnership, assuming that the partners agreed to use the allowance method to manage the Accounts Receivable. b) Assume that at the end of 31 December 2018, the capital of Jess and Joan did not change and the net income for the year was $310,000. Provide the journal entries to distribute the net 25 marks 50 marks