Reference no: EM132838759

Ali and Sumara started a retailing shop on a partnership. Each of them contributed $400,000 fund to the business. The partnership agreement provides:

1. Both Ali and Sumara are to receive interest at the rate of 4% pa on their capital contribution.
2. Sumara will receive a salary of $105,000 for the management of the shop, as well as superannuation contributions of $14,600.
3. Wages to employees amounts to $153,000. Superannuation to employees $15,700
4. The remainder in profit and loss will be shared Ali 45% and Sumara55%

The accounts for this income year show the following:

Income ($)

Sales  1,120,000

Expenses ($)
Cost of goods sold 526,000

Interest on capital paid to Ali and Sumara in total 9,000
Salary to Ali 105,000
Concessional Superannuation to Ali 12,000
Rent expense 88,000
Other deductible operating expenses 91,000

Required:

Problem 1: Calculate the net income of the partnership. Show the allocation of net income to each of the partners.