Johnny and Leon are adult partners in a business selling sporting goods. The partnership records, excluding GST, for the current income year disclose the following:

Receipts ($):
400,000	New sales of sporting goods during the year
21,000	Dividend franked to 50% received from an Australian resident company
10,000	Bad debts recovered
50,000	Exempt income
30,000	Capital proceeds from the disposal of shares acquired in 2009 and sold in June this income year (see Note4)
Payments or Losses ($):
10,000	Salary to Johnny
20,000	Fringe benefits tax
30,000	Interest on equity/capital provided by Johnny
5,000	Interest on loan as working capital made by Johnny to the partnership
10,000	Johnny's travelling expenses from home to work and return (see Note5)
2,000	Legal fees for the renewal of lease of the office building
1,000	Legal expenses for preparation of a partnership agreement
25,000	Staff salaries (see Note6)
30,000	Provision for doubtful debts (see Note7)
10,000	Business lunches (see Note8)

Other Notes
1.	Partners agreed that partnership profits or losses determined after paying the agreed wage and interest payment, are shared between Johnny and Leon on an equal basis,
2.	The partnership is registered as a Small Business Entity (SBE), and account income on cash base.
3.	On 1January this income year the partners discovered that an employee had stolen $3,000 cash in respect of money received from sales to customers.
4.	Johnny and Leon made a capital loss of $15,000 from the disposal of those shares. None of them have any capital gain this year.
5.	Johnny often takes work home as he finds it convenient to plan the next day's work in his home study.
6.	Staff salaries include $10,000 paid to Johnny's son Johnny Jr for washing the partners' cars. The Commissioner considers $5,000 to be a reasonable commercial rate for washing the cars.
7.	Johnny and Leon are owed $30,000 by a debtor who is bankrupt. They believe it is very unlikely that they will recover any money from the debtor, and do not take any action to recover the money.
8.	Partners spent $10,000 on business lunches with overseas buyers at expensive restaurants.
9.	Last income year, Johnny and Leon made a net partnership loss of $40,000.
10.	Johnny and Leon wish to minimise their tax liabilities for the income year.

Required:

Demonstrate the process to determine net income of the trust for the income year. Please refer to legislation/cases, and comment on how these information help to income and deduction the partnership has. You are not required to calculate any total amount nor the net outcome.