From the following, you are required to: 1. Calculate the net income or partnership loss for the income year ended 30 June 2021, giving brief reasons to support your calculation. Background The Jamestown Caf is a partnership business operated by Mr Joe Jones and Mrs Jill Jones in Jamestown, SA. The nature of the business is takeaway food and a fully licensed restaurant. The partnership's account balances for the income year ended 30 June 2021 show the following income and expense amounts, all of which are GST exclusive. INCOME Gross Sales $480,000 Other Receipt $5,000 EXPENSES Advertising $4,000 Electricity $1,600 Rent $10,000 Telephone $1,000 Insurance $3,950 Purchases $200,000 Light lunches for staff $700 Depreciation 4,000 Gift $1,000 Lease Document Expenses $2,000 Fringe Benefits Tax No entry Wages - Staff and Partners $180,000 Tax return preparation $2,400 2. The following additional information is provided: 1. The partnership is a small business entity. The partnership agreement stipulates that profits are to be distributed 50/50 between Joe and Jill. 3. 'Gross Sales includes an amount of $20,000 which was received from a related entity for the sale of grocery items. This transaction was not in the ordinary course of business and the market value of that trading stock was $40,000 Other Receipt comprises the total sale price of some commercial kitchen equipment that had formed part of the depreciating assets of the company. The commercial kitchen equipment had a tax adjustable value of $5,000. 4. 5. 6. 7. 8. 9. 10. *Trading stock' on hand at start of the year was $50,000 at cost and was $40,000 at the end of the year. *Advertising', 'Electricity', 'Rent', and 'Telephone' were all regular outlays to meet the continuous demand of operating the business. Similarly, 'Purchases of trading stock are a regular outlay. 'Insurance' of $3,950 was paid on 1 June 2021 and relates to business and contents insurance cover for a 12-month period from 1 June 2021 to 1 June 2022. *Light lunches' were provided to staff at various times. Depreciation related to plant and equipment that are depreciating assets used solely for the company's business, and the amount was calculated using methods and rates equivalent to tax diminishing value and acceptable for tax purposes. 'Gift' was a donation by the business of $1,000 to the local public hospital. 'Lease Document Expenses' were incurred for preparing and registering a lease of the premises in July 2020. 'Salary and Wages' included; $100,000 paid to staff, $50,000 paid to Joe who worked full time in the business and $30,000 paid to Jill who worked part-time in the business. 11. 12. 13. QUESTION 2 Part 2 (5 marks) Advise and calculate how the net income or partnership loss will be distributed to the partners