Reference no: EM133067483
Question - TV & Co, a partnership consists of two partners, Tony and Vivien, who contributed capital of RM100,000 and 200,000 respectively. The partnership prepared its accounts for the year ended 31st December 2020 as follows:
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RM
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RM
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Gross profit
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192,000
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Less: Salary expense including partners' salaries
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(108,000)
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Printing expense
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(24,660)
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Utility expense
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(7,200)
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Postage and stationery
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(600)
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Interest on partners' capital
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(8,400)
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Depreciation expense
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(1,440)
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Repair of office equipment
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(120)
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Gift of flowers for congratulating customer for operating a new outlet
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(4,200)
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(154,620)
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Net profit
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37,380
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Included in printing expense is a donation of RM1,080 made by the firm to an old folk center on 18th September 2020.
Each partner is entitled to draw salary and interest on partner's capital in proportion to his capital contribution. On 1st July 2020, Tony increased his capital contribution to RM200,000. The total amount of partner's salary incurred for the year ended 31st December 2020 is RM75,600. The capital allowances on partnership assets are RM2,310.
The profit/loss ratio for the partners has been appended as follow:
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Period:
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Tony
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Vivien
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1.1.2020 - 30.6.2020
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20%
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80%
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1.7.2020 - 31.12.2020
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40%
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60%
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Required -
a) Compute the provisional adjusted income/loss and divisible income / loss in respect of the partnership for the year ended 31st December 2020.
b) Compute the statutory business income/loss for each partner for the year of assessment 2020. Show all your workings.
c) State TWO (2) consequences if the partner did not keep sufficient records with them.