1. The Capital balances of Partners Eliza and Sara are $20, 600 and $14, 400 respectively before Ruth and Tatty are admitted to the Partnership. At admission Ruth purchased One third of Eliza's interest for $8, 000 and one third of Sara's interest for $4, 200. Tatty was admitted to the Partnership with an investment of $8, 000. For which she is to receive ownership title of $8, 000. After one year of operations, the Partnership made an income of $7, 000 and the Partners participation in net income was to be done under the following income ratios.

Interest allowance of 30% annually on their capital balances, salary allowance of $1, 600, $4, 000, $3,000 and $2, 000 to Eliza, Sara, Ruth and Tatty respectively. Furthermore, Eliza was entitled to a bonus of 10% if the difference between her salary allowance and Net income is less than $5, 000 and the residual should be shared on an equal basis

i. Journalize the entries for the admission of Ruth and Tatty.( 5 Marks)

ii.Determine the Capital balances of Eliza and Sara after admission of Ruth and Tatty(10 Marks)

iii.Prepare the income sharing schedule and pass the necessary journal entry( 5 Marks)

2.A University freight line is a provider of transportation services to New York residents. Included in its balance is land, Buildings and coach equipment. Depreciation is calculated separately for each depreciating item. The following transaction was completed for the University in the year 2019. Equipment with an accumulated depreciation of $80, 000 and a cost of $120, 000 was traded for similar new equipment with a cash cost of $186, 000. A trade in allowance was received by the university on the old equipment and paid the balance in cash.Required: (show workings clearly)

i.Calculate the book value of the old asset on the date of the transaction ( 2 Marks)

ii.What is the Gain on Loss on the trade for the old asset( 2 Marks)

iii.What is the value to be recorded as the cost for the New Equipment?( 6 Marks)