Question 3 15 Points Mitchell and Morton formed a partnership, M&M Confectioners, on 1st July 2019. The partners agreed to invest equal amounts of capital with Mitchell investing the following assets and liabilities: Carrying Amount Fair Value Accounts Receivable 18,000 17,400 Inventory 65,775 68,700 Prepaid Insurance 3,600 3,600 Store Equipment 40,200 37,500 Accounts Payable 33,450 33,450 Morton invested cash in an amount equal to the net assets contributed by Mitchell. The partnership agreement specified the following: Interest of 12% p.a to be charged on advancesand partners initial capital contribution. Interest charged 10% p.a on partner's drawings. Mitchell to receive 75% of residual profits dueto managing the business while Morton would receive 25%. AdditionalInformation: Morton advanced $22,500 cash to the partnershipon 1st January 2020. Thiswill be repaid by 31st December 2020. Morton withdrew $10,000 in anticipation of profit on 30th March and Mitchell withdrew $27,000 on 1st June. During the financial year ending 30th June 2020, the partnership earned net profit of $82,500 Required: 1. Prepare the journal entries required to record each partner's contribution to the partnership on 1st July 2019. (3 marks) 2. Prepare a schedule to allocate the partnership profit based on the partnership agreement. (4 marks) 3. Prepare the Equity section of the Partnership Balance sheet at 30 June 2020. (3 marks) 4. In the above question, the partnership agreement assigned Mitchell a larger percentage of residual profits than Morton due to Mitchell's role in managing the business. If instead, the partners agreed that Mitchell would be paid $45,000 as a salary and any partnership profits would be allocated equally, discuss how the $45,000 salary expense would affect the net profit of the partnership. (3 marks) 5. If Mitchell and Morton agreed to amend their partnership agreement to allow Mitchell a salary expense of $45,000 and the residual profit to be shared equally, prepare an amended schedule to determine the new distribution of profit to each partner. (2 marks)