John and Paul are in partnership and profits are shared 60:40 respectively. On 1 July 2013 the equity accounts were as follows: John Paul Capital $400,000 $700,000 Retained Earnings $540,000 $850,000 John received a salary of $50,000 and Paul received a salary of $75,000. Each partner was entitled to 10% interest on their capital balances. The profit for the year was $850,000 before providing for salaries and interest on capital balances. 1. Use a table to calculate the profit distribution for each partner. (13 marks) 2. Prepare the two journals to record the allocation of profit as at 30th June 2014, using Method 2. (4 marks) 3. Prepare the Retained Earnings account for John as at 30th June 2014. (3 marks) Question 3 – Accounting for Income Tax (10 marks) Explain how the following items are treated differently for accounting and tax purposes: a. Depreciation of non-current assets b. Long-service leave payable c. Allowance for doubtful debts d. Prepaid insurance e. Fines and penalties