Johnson and Starmer have been in partnership as political lobbyists for many years The partnership income statement for the year ended 31 March 2021 is detailed below Notes Gross trading profit 250,000 Add other income Client gratuity for a job well done 1,000 Bank interest received 30 251,030 Less Expenses Manpower costs 96,800 1 Office expenses 8,270 Communication costs 4,000 2 General expenses 10,100 3 Professional fees 3,750 4 Motor and travelling 15,550 5 Provision for bad debts 2,000 6 Insurances 6,000 Depreciation 5,100 151,570 Net profit for the year 99,460 Notes Manpower costs included payments to the partners spouses Each spouse was paid 5,000 for duties that had a commercial value of 7,500 Communication costs include 3,100 for office phones and 900 for the partners home telephone costs It is estimated that the home telephones are used 25 privately General expenses includes Entertaining customers (1,200), entertaining staff (900), and a fine (2,000) for a Data Protection Breach Professional fees are legal fees for the renewal of the 10 year office lease (1,000) and a payment of 2,750 to the firms accountants for the preparation of the annual accounts Motor and travelling includes 4,000 and 3,000 respectively in respect of Johnsons and Starmers total car expenses The total miles and business miles for each of the partners cars for the accounting year were Johnson 12,000 and 6,000 and Starmer 10,000 and 7,000 The rental costs of a leased car used by an employee were also included The car had CO2 emissions of 175 g km and the leased costs for the year were 3,200 The provision for bad debts includes a customers bad debt written off when the customer became bankrupt 2,500 and the recovery of part of a bad debt (500) written of in the accounts two years ago that was received this year by the partnership Capital allowances of 2,000 have been calculated as due for the year Required Calculate Johnson and Starmerss taxable profits (start with the net profit figure of 99,460 and include adjustment entries for notes 1 to 7 showing a zero (0) if no adjustment is required)

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 20, 2024

Johnson and Starmer have been in partnership as political lobbyists for many years. The partnership income statement for the year ended 31 March 2021 is

Johnson and Starmer have been in partnership as political lobbyists for many years. The partnership income statement for the year ended 31 March 2021 is detailed below:-

Notes

Gross trading profit 250,000

Add: other income

Client gratuity for a job well done 1,000

Bank interest received 30

251,030

Less: Expenses

Manpower costs 96,800 1

Office expenses 8,270

Communication costs 4,000 2

General expenses 10,100 3

Professional fees 3,750 4

Motor and travelling 15,550 5

Provision for bad debts 2,000 6

Insurances 6,000

Depreciation 5,100 151,570

Net profit for the year 99,460

Notes

Manpower costs included payments to the partners spouses. Each spouse was paid 5,000 for duties that had a commercial value of 7,500.

Communication costs include 3,100 for office phones and 900 for the partners home telephone costs. It is estimated that the home telephones are used 25% privately.

General expenses includes: Entertaining customers (1,200), entertaining staff (900), and a fine (2,000) for a Data Protection Breach.

Professional fees are: legal fees for the renewal of the 10 year office lease (1,000) and a payment of 2,750 to the firms accountants for the preparation of the annual accounts.

Motor and travelling includes 4,000 and 3,000 respectively in respect of Johnsons and Starmers total car expenses. The total miles and business miles for each of the partners cars for the accounting year were Johnson: 12,000 and 6,000 and Starmer: 10,000 and 7,000. The rental costs of a leased car used by an employee were also included. The car had CO2 emissions of 175 g/km and the leased costs for the year were 3,200.
The provision for bad debts includes a customers bad debt written off when the customer became bankrupt 2,500 and the recovery of part of a bad debt (500) written of in the accounts two years ago that was received this year by the partnership.

Capital allowances of 2,000 have been calculated as due for the year.

Required

Calculate Johnson and Starmerss taxable profits (start with the net profit figure of 99,460 and include adjustment entries for notes 1 to 7 showing a zero (0) if no adjustment is required).