Question 3 16 Marks Sally Bloom, has an accounting firm with many small clients and has been operating successfully for about 10 years. However, she has been working long hours and she is in need of employing another accountant. After talking to her friend, Gordon Wells, they decided to form a partnership as of 1 January 2016, called Sally and Gordon accountants. Some of the provisions of which were as follows: 1) Gordon to contribute $35,000 cash and other assets that have the following fair values: Equipment $89,200, and Accounts receivable totalling $15,300. 2) Sally to contribute the net assets of her business; nolensgxe bulut Carrying Fair Value Amount Cash 16,000 16,000 Accounts Receivable no sidey 20,000 17,000 Building 120,500 137,000 Accumulated Depreciation-Building emade 090 08 101 bo Bos (20,000) Equipment HA ni 125,300 104,000 Accumulated Depreciation-Equipment If betjo (15,000) Accounts Payable estelle O0 35,500 85, 500 Because of Gordon's expertise, they agreed for his capital to be $145,000. (4) Sally is entitled to a salary allowance of $20,420 per annum and Gordon is entitled to $15,750 per annum.V 5) Interest to be allowed at 10% per annum on the initial capital contributed by the partners. 6) Interest at 5% per annum to be charged on partners' drawings. 7) Residual profits or losses of the firm to be divided between or borne by Sally and Gordon in the proportion of 6:4 respectively. 6 = 50 on 4 = 6 aww venom Jso During the year ended 31 December 2016, the partnership earned net income of $60,000. Gordon withdrew $8,000 on 1 October 2016; Sally withdrew $5,800 on 30 June 2016. Required: How a) Prepare the general journal entries necessary to record the initial investments of both partners clo (Assume that the partners agreed to use the allowance method to manage accounts receivable) 6 marks b) Prepare the general journal entries required to close the profit or loss summary account and distribute the profit or loss using method 2 as at 31 December 2016 (Show all workings). 10 marks - Interest use profit Drawings distribution table