Cam's expansion plan, while well intentioned was not that well thought out. Cam has quickly realised...

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Cam's expansion plan, while well intentioned was not that well thought out. Cam has quickly realised he can't be in two places at once and so he needs some help in running both locations. Luckily, Cam's close friend Fotos Armilyf has been looking for an investment opportunity. Fotos has $350,000 available to invest and is keen to enter a partnership with Cam. After some discussion Cam and Fotos have agreed that Fotos' $350,000 will enable him to acquire 40% of the new partnership they will set up called Fotos with Cam Meras. Fotos and Cam have arranged for an independent valuation of the business prior to Fotos investing his funds and determined that Shutter Speed's current position is Assets Liabilities Equity (C Meras) As part of the discussions on becoming partners, Fotos and Cam have agreed to share any profits or losses in line with their partnership split 60% to Cam and 40% to Fotos. To reward Fotos for taking on the management of one of the locations, the partners have agreed to pay Fotos a salary of $25,000 and 5% interest on his capital balance. In order for Fotos to start the partnership with Cam, he needs to exit a partnership he has been in with his cousins Arti Stick and Des Eyner called Uncreative Cousins. The three cousins have agreed to dissolve the partnership as all are keen to do other things. The final ever balance sheet for Uncreative Cousins shows the following Assets Cash Accounts Receivable Inventory 1,106,054 708,022 398,032 Office Equipment Motor Vehicles Warehouse Land Goodwill 235,003 31,000 15,300 15,220 29,780 39,600 96,000 9,869 471,772 Liabilities Accounts Payable Accrued Expenses_ Equity Fotos Arti Des 4,650 1,400 6,050 359,712 53,000 53,000 465,722 471,772 Date QUESTION 7 - 11 marks Using the relevant information from page 11 of the Information Booklet REQUIRED: A) Show any calculations and the journal entry required to account for the new partnership, Fotos with Cam Meras Question 7 Part A (Enter answers here) Details Dr Cr Cam has predicted that Fotos with Cam Meras will make a profit of $67,000 in its first year of operation. REQUIRED: B) Show any calculations required to determine how the expected profit would be shared between Cam and Fotos. Question 7 Part B (Enter answers here) Cam's expansion plan, while well intentioned was not that well thought out. Cam has quickly realised he can't be in two places at once and so he needs some help in running both locations. Luckily, Cam's close friend Fotos Armilyf has been looking for an investment opportunity. Fotos has $350,000 available to invest and is keen to enter a partnership with Cam. After some discussion Cam and Fotos have agreed that Fotos' $350,000 will enable him to acquire 40% of the new partnership they will set up called Fotos with Cam Meras. Fotos and Cam have arranged for an independent valuation of the business prior to Fotos investing his funds and determined that Shutter Speed's current position is Assets Liabilities Equity (C Meras) As part of the discussions on becoming partners, Fotos and Cam have agreed to share any profits or losses in line with their partnership split 60% to Cam and 40% to Fotos. To reward Fotos for taking on the management of one of the locations, the partners have agreed to pay Fotos a salary of $25,000 and 5% interest on his capital balance. In order for Fotos to start the partnership with Cam, he needs to exit a partnership he has been in with his cousins Arti Stick and Des Eyner called Uncreative Cousins. The three cousins have agreed to dissolve the partnership as all are keen to do other things. The final ever balance sheet for Uncreative Cousins shows the following Assets Cash Accounts Receivable Inventory 1,106,054 708,022 398,032 Office Equipment Motor Vehicles Warehouse Land Goodwill 235,003 31,000 15,300 15,220 29,780 39,600 96,000 9,869 471,772 Liabilities Accounts Payable Accrued Expenses_ Equity Fotos Arti Des 4,650 1,400 6,050 359,712 53,000 53,000 465,722 471,772 Date QUESTION 7 - 11 marks Using the relevant information from page 11 of the Information Booklet REQUIRED: A) Show any calculations and the journal entry required to account for the new partnership, Fotos with Cam Meras Question 7 Part A (Enter answers here) Details Dr Cr Cam has predicted that Fotos with Cam Meras will make a profit of $67,000 in its first year of operation. REQUIRED: B) Show any calculations required to determine how the expected profit would be shared between Cam and Fotos. Question 7 Part B (Enter answers here)

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A Journal entry to account for the new partnership Fotos with Cam Meras Date D... View the full answer