Question

On 1 July 2019, Tully 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 $ 241,000 in cash while Tully Ltd would provide $ 39,900 in cash and manufacturing equipment currently held by Tully Ltd that had a fair value of $ 199,900 . The equipment was currently recorded by Tully Ltd at a carrying amount of $ 180,000 , net of accumulated depreciation of $ 30,100 . 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 2020 was as follows. Statement of financial Position (partial) Cash $ 56,000 Accounts payable $ 39,900 Raw materials 32,000 Accrued wages 15,900 Inventory (undistributed) 12,900 Loan 200,000 Work in progress 32,000 Equipment 399,900 Accumulated depreciation ( 79,980 )     $ 452,820 $ 255,800 Cash receipts and payments Payments Receipts Contributions $ 280,900 Loan 200,000 Purchase of raw materials 64,000 Wages 96,000 Purchase of equipment (2 July 2019) 200,000 Other expenses 64,000     $530,000 $ 480,900 Costs incurred Wages $ 111,900 Raw materials 72,000 Overheads including depreciation 144,000 327,900 Cost of inventory ( 296,780 ) Work in progress at 31 July 2020 $ 31,120 Required Prepare the journal entries in the records of Tully Ltd in relation to the joint operation for the year ending 30 June 2020. 1 July 2019 Account titles and explanation Debit Credit 30 June 2020 Account titles and explanation Debit Credit Account titles and explanation Debit Credit Click if you would like to Show Work for this question: Open Show Work

Answer 1