QUESTION 2 (20 Marks) Britney Clinton and Hillary Spears conduct business in partnership and share in profit and losses of the partnership in a 3:2 ratio, respectively. Their bookkeeper has prepared the following Statement of Profit or Loss and other Comprehensive income in respect of the partnerships 2019 year of assessment: R R Income Gross income 487 000 Bad Debts recovered (note 1) 3 750 Dividends received (note 2) 4 500 Interest from a South African source 6 360 Settlement 19 390 521 000 Less: Expenditure Credit losses (note 1) 6 000 Donations (note 4) 18 750 Insurance (note 5) 13 500 Delivery van purchased (note 3) 39 600 Licences: Trade and delivery van 1 080 Delivery van running expenses 5 500 Depreciation Shop fittings at 10% (note 3) 4 500 Cash register at 10% (note 3) 2 250 Rental paid 21 600 Staff salaries and wages 90 000 Stationery and printing 1 080 Drawings: Britney (note 6) 6 600 Salaries paid: Britney 36 000 Hillary 45 000 291 460 Net profit 229 540 Net profit Britney (60%) 137 724 Hillary (40%) 91 816 229 540 Notes: 1. The credit loss of R3 750 was recovered from a former debtor of Britney when he had been trading on his own, two years before. Britney sold his debtors to the partnership. R2 000 of the bad debts relates to debts that the partners took over when they purchased the business. The balance of the bad debts is wholly in respect of present customers who have failed to pay their accounts. 2. During the 2019 year of assessment, the partners decide to invest their surplus cash funds and they purchased 25 000 shares in Pablo (Pty) Ltd, a company registered in the Republic, at R3 a share. The company paid a dividend of R4 500 to the partnership on 31 December 2018. 3. The depreciation claimed in the Statement of Profit or Loss and other Comprehensive Income has been calculated on the straight-line method in respect of the shop fittings and the cash register. These items were purchased on 1 March 2018. No depreciation has been provided for in the Statement of Profit or Loss and other Comprehensive Income in respect the delivery van which was purchased on 1 May 2018 for R39 600 (excluding VAT). The approved write-off periods are: Shop fittings: six years Cash register: five years Delivery vehicles: four years 4. During the 2019 year of assessment, the partnership made the following donations: R To a non-public benefit organisation 3 750 To a public benefit organisation 15 000 Official receipts were obtained. Britney also donated R20 000 in his own name to a qualifying public benefit organisation and obtained the required receipt. 5. Insurance premiums paid during the year were in respect of the following policies: R Loss of profits profit policy 8 625 Fire policy 4 875 13 500 6. Other partnership information (not taken into account in arriving at the net profit of R222 040: Britney Hillary R R Interest on capital 20 000 - Drawings ((including the R6 600 deducted in the Statement of Profit or Loss and other Comprehensive income) 108 000 90 000 7. Both partners are under the age of 65 years. All amounts paid to or on behalf the partners are in accordance with the partnership agreement. Calculate taxable income of the partnership for the current year of assessment.