James and Patrick are partners trading as Highway Enterprises and sharing profits and losses equally. The

following information was extracted from their books of accounts for the year ended $31$ December $2022$:

Additional information:

Insurance comprises:

Insurance cover for imported machinery against loss on transit

Insurance cover for business premises

Sh$.$

$150,000$

$200,000$

$350,000$

Legal fees include $Sh\mathrm{.}25,000$ incurred on drafting a loan arrangement between the partnership

and a bank.

Cost of goods sold include carriage cost of a machine to the business premises amounting to

Sh$.34,000.$

Closing inventory was overvalued by $Sh\mathrm{.}25,000$ and opening inventory undervalued by

Sh$.48,000.$

Dividend income was from investment in share in a local Farmers Cooperative Society.

Required:

i$.$ Compute adjusted taxable profit or loss of the partnership for the year ended $31$ December $2022.$

$(10$ marks$)$

ii$.$ Allocation of taxable profit or loss computed in $($d$)($i$)$ above to the partners.$(2$ marks$)$