1. Red and White decided to enter into a partnership agreed as from 1 July 2019, with requirements as follows:

2. Red to contribute $15,000 cash, inventory with a fair value of $28,500, plant and machinery $80,000, accounts payable totalling $4,500.
3. White to contribute $13,500 cash, land and buildings $250,000, Accounts receivable $9,500. A mortgage of $150,000 secured over the Buildings was outstanding and the partnership agreed to assume the mortgage.
4. Profits and losses are to be divided between Red and White 2:1 respectively.
5. Interest of 8% pa is to be allowed on capital contributed by the partners. Interest at 10% is to be charged on partners drawings.
6. Each partner will receive an annual salary of $20,000.
7. Red withdrew $15,000 on 1 January, 2020 and White withdrew $10000 on 1st April, 2020.
8. During the year ended 30th June, 2020, the income of the partnership totalled $164,600 and the expenses amounted to $46,000. (These figures did not exclude interest on capital and drawings and salaries).

9. Required:

10. Prepare general journal entries necessary to open the books of the partnership (narrations are not required). 6 Marks
11. Prepare a Profit Distribution Statement/Schedule for the year ended 30th June 2020 (the partnership does not use retained earnings accounts). 9 Marks
12. Make the journal entry to transfer the final distribution from the Profit Distribution Statement to each partner (the partnership uses retained earnings accounts). 2 Marks
13. Calculate the capital balances for Just and Now at 30th June, 2020. 4 Marks