Xiao, Yiheng and Zhiwen are in partnership with profits shared in the ratio of 2:2:1 respectively." The partnership agreement provides the following: Interest on capital to be credited at 10% p.a. . Interest on drawings to be charged at 12% p.a. Zhiwen is to receive a salary in addition to any profit share . Loans by partners to the business are an interest rate of 8% p.a. The following information relates to the 30 June, 2020 account balances before applying any interest payments and before the profit distribution. Capital - Xiao 1.7.2019 62,500 Capital - Yiheng 1.7.2019 62,500 Capital - Zhiwen 1.7.2019 31 250 12 Retained earnings - Xiao 1.7.2019 43,750 Retained earnings - Yiheng 1.7.2019 37,500 Retained earnings Zhiwen 1.7.2019 25,000 Gross profit 700,000 Operating expenses 137,500 Salary due to Zhiwen 62,500 Drawings - Xiao 72,500 Drawings - Yiheng 47,500 Drawings - Zhiwen 112,500 4 He da In addition Xiao made a short-term loan to the business of $45,000 on April 1 and Zhiwen invested a further $35,000 cash as Capital on June 30, 2020. Required: Using 'T' account ledger format for parts i. - iii. i. Prepare the Profit and Loss Summary Account ii. Prepare the Profit Distribution Account iii. Prepare the partners Retained Earnings Accounts iv. Prepare the Statement of Changes in Partners Equity Profit and Loss Summary 30/6 30/6 ] ( Profit Distribution 30/61 30/6 (( 30/6 ( 4 30/6 ] ( Xiao, Retained Earnings 1/763 Balance $43 750 e t 30/6 30/62 Yiheng, Retained Earnings 1/72 Balance $37 500+ 30/6 30/62 30/6 & Zhiwen, Retained Earnings 41/72 30/6 t Balance $25 000 { 30/6 30/6 [ 1 30/6 2 30/6 " 3 3 2 XYZ PARTNERS Statement of Changes in Partners' Equity for the year ended 30 June 20204 CAPITAL Xiao Yiheng Zhiwen Total Id 3 Capital balances 1 July 2019- Additional capital investment Capital balances 30 June 2020 RETAINED EARNINGS Balances 1 July 2019 Profit allocation/Equity increase Less: Drawings Balances 30 June 2020 TOTAL EQUITY $ Mack and Hunt agreed to combine their businesses and form a partnership to trade as M&H Trading Ltd. The Balance Sheets for their respective individual trading operations are shown below.' Mack Trading Co. Hunt Trading Co. Balance Sheet Balance Sheet As at November 1, 2020 As at November 1, 2020 Assets $ Assets Bank 6,000 Banke 8,000 Accounts Receivable 13,000 Accounts Receivable 7,000 Inventory 23,000 Inventory 12,000 Van 14,000 56,000 Premises 70,000 Total Assets 56,000 Total Assets Liabilities Liabilities Accounts payable 16,000 Accounts payable 7,000 Loan 5,000 21,000 Bank overdraft 7,000 Mortgage 45,000 Owners Equity 35,000 Owners Equity 14 97,000 14 59,000 38,000 e The following terms were agreed to on formation of the partnership: Mack's Accounts Receivable were expected to realise $12,000 and the van had an agreed value of $10,000 Hunt's premises were taken into the partnership accounts valued at $85,000 and Hunt is to settle the bank overdraft herself Required; i. Prepare general journal entries to give effect to the above ii. Prepare the Balance Sheet of M&H Trading Ltd. as at November 1, 2020- QUESTION 3 Part B i. 64 tttte 0 QUESTION 3 Part B ii. M M&H Trading Ltde Balance Sheet as at 1 November, 20202 0 1 42 le 0 III 2 1 la 10 0 0