Question 4 (10 marks)

David and Roger formed a partnership on 1 July 2021 with initial capital balances of $80 000 and $50 000 respectively. For the year ended 30 June 2021, the Profit or Loss Summary account disclosed a final credit balance of $90 000.

Prepare the clasing entry to transfer the profit disclosed in the Profit or Loss Summary account to the Profit Distribution account under

1.Method 1 Capital accounts that include profits and losses. (2.5 marks)

2.Method 2 Fixed capital accounts, (2.5 marks)

1

Prepare the closing general journal entry to distribute the profit to David and roger assuming they agreed to share profits

in proportion equally under method1 and method 2 (25 marks)

Show how the partners' equity accounts would appear in the balance sheet of the partnership at 30 June 2021. (2.5 marks))