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On the 1 July 2018, Angie, Bob and Chloe decided to form a partnership. Angie contributed cash and inventory. She contributed $70,000 in cash. The...

On the 1 July 2018, Angie, Bob and Chloe decided to form a partnership. Angie contributed cash and

inventory. She contributed $70,000 in cash. The inventory was originally purchased for $40 000. The net

realisable value of inventory is $45 000. Bob contributed a vehicle with a fair value of $80 000. The cost of

the vehicle is $125 000 and the Accumulated Depreciation $50,000. Chloe contributed equipment that

was originally purchased for $250,000 and had been depreciated for $50,000. The fair value of the

equipment was $160 000 and a corresponding loan of $100 000.


The following has been agreed among partners:‐

- Interest on drawings at 8 percent.

- $5 000 salary to Angie, a $3 000 salary to Chloe.

- 8% interest on their investments,


At the end of financial year, 30 June 2019 the business earned net profit $600. The capital of drawing

accounts of the partners showed the following figures:

- Angie's capital $120 000; drawing $10 000

- Bob's capital $ 90 000; drawing $ 8 000

- Chloe' capital $ 70 000; drawing $ 5 000.


a) Prepare the general journal entries necessary to record the initial investments by

respective partners.

Top Answer

The following are the journal entries for each partner: Debit Cash......................70,000 Debit... View the full answer

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