Reference no: EM132853002
Question - Josh & Elina run a retail business in partnership and have elected NOT to apply any of the small business concessions. An analysis of the financial records of the partnership for the year ended 30 June 2020 reveals the following:
RECEIPTS $
Sales 345,000
ANZ dividends - fully franked 840
Proceeds from sale of factory (see additional information) 545,600
Interest on drawings - Josh 150
PAYMENTS
Cash purchases 124,000
Computer (purchased 1/4/2020) (life 5 years) 4,800
Drawings - Josh 6,000
Interest on capital - Josh 1,200
Interest on capital - Elina 800
Interest on loan from Josh 1,600
Delivery van expenses 6,400
Rent on premises - paid to Elina 12,000
Other expenses - all deductible 66,240
Salary - Josh 22,000
Salary - Elina 34,000
Superannuation - employees & subcontractors 2,500
Superannuation - Elina 7,200
Wages - daughter Rose (casual sales assistant) 26,000
Subcontractors 18,000
ADDITIONAL INFORMATION:
Stock on hand:
1/7/2019 $22,000
30/6/2020 $26,000
Decline in value - all assets are depreciated using the reducing balance method and assets held on 1 July 2019 had all been purchased after 10 May 2007.
The factory was sold on 1 October 2019, having been purchased on 14 February 2009 with a cost base of $300,000.
Delivery van expenses exclude decline in value.
All required substantiation requirements have been met.
The Commissioner is of the opinion that a reasonable wage for daughter Rose is $10,000.
Profits and losses are to be distributed equally after allowing for partners' salaries, interest on capital and interest on drawings. Partnership assets are owned equally.
Other information - Elin
Gift to Red Cross $250
Losses carried forward from previous years $3600
PAYG instalments paid $22,000
She has private health cover
Item Estimated Life Opening written down value 1/7/19
Delivery van 7 years $18,600
Required - For the year ended 30 June 2020, you are required to:
(a) Calculate section 90 net income of the partnership.
(b) Make partnership distribution statement.
(c) Calculate Elina's Taxable income and Tax Payable/Refund?