Question On 1 July 2016, Tally Ltd and Cooktown Ltd signed a contractual agreement to form a joint operation for the manufacture of kitchen products. The agreement provided that Cooktown Ltd would contribute $240 000 in cash while Tally Ltd would provide $40 000 in cash and manufacturing equipment currently held by Tally Ltd that had a fair value of $200 000. The equipment was currently recorded by Tally Ltd at a carrying amount of $180 000, net of accumulated depreciation of $30 000. The agreement provided that each operator would receive half of the output of the joint operation. Depreciation on equipment is charged at 20% p.a. on cost, based on the expected pattern of use in the joint operation. Financial information provided by the joint operation at 30 June 2017 was as follows. Statement of Financial Position (partial) Cash $56 000 Accounts payable Raw materials 32 000 Accrued wages Inventory (undistributed) 16 000 Loan Work in progress 32 000 Equipment 400 000 Accumulated depreciation (80 000) $456 000 $30 000 26 000 200 000 $256 000 Receipts $280 000 200 000 Cash Receipts and Payments Payments Contributions Loan Purchase of raw materials $ 64 000 Wages 96 000 Purchase of equipment (2 July 2016) 200 000 Other expenses 64 000 $424 000 $480 000 Costs Incurred Wages Raw materials Overheads including depreciation on equipment $112 000 72 000 144 000 328 000 (296 000) $32 000 Cost of inventory Work in progress at 30 June 2017 Required Prepare the journal entries in the records of Cooktown Ltd and for Tally Ltd in relation to the joint operation for the year ending 30 June 2017