QUESTION 7 - 7 marks Using the relevant information from pages 4 and 6 of the Information Booklet Paul and Jim have had some further discussions with Fleur Rootine and have renegotiated their agreement to admit Fleur as a partner. Fleur will still receive a 20% stake in the partnership but will have to contribute $45,000 cash to join. Paul and Jim will continue to share the remining ownership equally (40% each) and their contributions will be equal to their capital balances from the June 30, Balance Sheet (refer to page 4) REQUIRED: A) Show the calculations to admit Fleur as a partner, showing the new capital balances for each partner and how any goodwill is shared between the new partners. Question 6 Part A (Enter answers here) Paul and Jim have been reviewing their performance but are struggling to really understand what position their business is in. They have provided you with the following reports and asked you to provide them some advice. Energised Athletes Make the Leap COMPARATIVE BALANCE SHEETS AS AT JUNE 30 Opening Balances Closing Balance Current Assets Petty Cash 150 150 Bank 1,204 62,199 Accounts Receivable 21,540 33,682 Less Allowance 4,220 17,320 7,920 25,762 Inventory 37,800 35,860 Prepaid Expenses 4,680 8,870 70,875 49,577 Non Current Assets Equipment & Fixtures less Acc. Depreciation Buildings less Acc. Depreciation Vehicles less Acc. Depreciation land 81,000 10.125 175,000 46 500 51,000 15,726 81,000 31,423 175,000 139,500 85,000 29,868 128,500 35,500 35,274 130,000 425,803 55,132 130,000 403,050 Total Assets Current Liabilities Accounts Payable Accrued Expenses GST Lability 12,600 5,170 2.750 16,320 4,970 5.750 20,520 27,040 Non Current Liabilities Bank Loan Total Liabilities Net Assets 351,000 371.520 54,283 229,000 256,040 147,010 Equity Capital-Paul Volt Capital - Jim Nastique 54,283 84,010 63,000 During the year Jim contributed $70,000 capital (in cash) to become a partner. Paul and Jim have asked for some further clarification on some of their non-current assets and in particular how depreciation was worked out for a couple of their newer assets. Paul has been back through his records and can see that the mower they purchased was listed as having a cost price of $5200 and that the decision was made to depreciate it at 20% per year using the reducing balance method. I The other asset Paul is interested in is the Future Proof Training Equipment which was acquired for a cost of $60,000. This equipment has the ability to track how many hours it is used for. Paul expects to be able to resell the equipment for $5,000 when he is finished with it and in that time expects to able to use it for at total of 11,000 hours. Jim has also identified a group of assets that the business can acquire to enhance their current operations. The details of the assets are Training Inventory Measurement Equipment Transportation Vehicle Storage Container $3,800 $5,400 $21,600 $16,200 All items are listed at their fair values. Paul and Jim are looking at asking a new partner to join them in the business. Fleur Rootine is an experienced gymnastic instructor and is keen to contribute to the business. After some discussions Paul and Jim have agreed that Fleur would be given a 20% stake in the business if she were to contribute $40,000. As part of the new partnership agreement, Paul and Jim would both receive a $20,000 salary and / of any profits while Fleur would receive y of any profits earned as she would be responsible to attracting new clients to the business. QUESTION 7 - 7 marks Using the relevant information from pages 4 and 6 of the Information Booklet Paul and Jim have had some further discussions with Fleur Rootine and have renegotiated their agreement to admit Fleur as a partner. Fleur will still receive a 20% stake in the partnership but will have to contribute $45,000 cash to join. Paul and Jim will continue to share the remining ownership equally (40% each) and their contributions will be equal to their capital balances from the June 30, Balance Sheet (refer to page 4) REQUIRED: A) Show the calculations to admit Fleur as a partner, showing the new capital balances for each partner and how any goodwill is shared between the new partners. Question 6 Part A (Enter answers here) Paul and Jim have been reviewing their performance but are struggling to really understand what position their business is in. They have provided you with the following reports and asked you to provide them some advice. Energised Athletes Make the Leap COMPARATIVE BALANCE SHEETS AS AT JUNE 30 Opening Balances Closing Balance Current Assets Petty Cash 150 150 Bank 1,204 62,199 Accounts Receivable 21,540 33,682 Less Allowance 4,220 17,320 7,920 25,762 Inventory 37,800 35,860 Prepaid Expenses 4,680 8,870 70,875 49,577 Non Current Assets Equipment & Fixtures less Acc. Depreciation Buildings less Acc. Depreciation Vehicles less Acc. Depreciation land 81,000 10.125 175,000 46 500 51,000 15,726 81,000 31,423 175,000 139,500 85,000 29,868 128,500 35,500 35,274 130,000 425,803 55,132 130,000 403,050 Total Assets Current Liabilities Accounts Payable Accrued Expenses GST Lability 12,600 5,170 2.750 16,320 4,970 5.750 20,520 27,040 Non Current Liabilities Bank Loan Total Liabilities Net Assets 351,000 371.520 54,283 229,000 256,040 147,010 Equity Capital-Paul Volt Capital - Jim Nastique 54,283 84,010 63,000 During the year Jim contributed $70,000 capital (in cash) to become a partner. Paul and Jim have asked for some further clarification on some of their non-current assets and in particular how depreciation was worked out for a couple of their newer assets. Paul has been back through his records and can see that the mower they purchased was listed as having a cost price of $5200 and that the decision was made to depreciate it at 20% per year using the reducing balance method. I The other asset Paul is interested in is the Future Proof Training Equipment which was acquired for a cost of $60,000. This equipment has the ability to track how many hours it is used for. Paul expects to be able to resell the equipment for $5,000 when he is finished with it and in that time expects to able to use it for at total of 11,000 hours. Jim has also identified a group of assets that the business can acquire to enhance their current operations. The details of the assets are Training Inventory Measurement Equipment Transportation Vehicle Storage Container $3,800 $5,400 $21,600 $16,200 All items are listed at their fair values. Paul and Jim are looking at asking a new partner to join them in the business. Fleur Rootine is an experienced gymnastic instructor and is keen to contribute to the business. After some discussions Paul and Jim have agreed that Fleur would be given a 20% stake in the business if she were to contribute $40,000. As part of the new partnership agreement, Paul and Jim would both receive a $20,000 salary and / of any profits while Fleur would receive y of any profits earned as she would be responsible to attracting new clients to the business