Question 2 (7 marks) (a) Laurie Howe, a resident taxpayer, operates a small Cafe. She lives with her husband Nick. During the income year of 2019/2020, Laurie had the following transactions: items Amount Sales $336,800 Purchases of trading stock (including 124,100 cakes and cones supplied by her husband Nick for $12,000 which had a market value of $7,000) Trading stock on 1 July 2019 15,300 Trading stock on 30 June 2020 Other deductions Ignore any personal consumptions of the trading stock by Laurie and her husband. Required: Calculate Laurie's taxable income for the 2019/2020 tax year (4 marks) (b) on 1 July 2019, Colonel Toxic commenced his business and operated a fast food outlet Colonel chooses to apply his own estimates of effective life to the two assets purchased during his first year of operations 8.900 143,200 = Asset Cost (5) Date of purchase Effective life Depreciation (years) method Espresso Machine 6,000 5 Prime cost 1 September 2019 1 April 2019 Menu Board 3,000 5 Diminishing value Required: Calculate the deduction for decline in value available to Colonel for the 2019/2020 income year.(3 marks) Question 4 (10 marks) Butler and John operate a music store as a partnership. The partnership agreement states that profits and losses are to be shared equally after adjusting for interest on capital, superannuation, drawings and salaries paid to the partners $896,900 2,000 Income ($) Sales Interest from Advance to John Expenses ($) Cost of goods sold Salary-Butler Salary-employees Superannuation to Butler Superannuation to employees Interest on capital to Butler Interest on Capital to John Interest on loan from CBA Drawings to Butler Drawings to John Other deductible operating expenses 416,000 63,000 110,000 14,000 13,000 7,000 9,500 19,000 32,000 17,000 105,000 Additional information: Trading stock balances were estimated as follows: 30 June 2019 86,000 30 June 2020 94,000 Required: Calculate the net income of the partnership. Show the allocation of net income to each of the partners. THE END OF ASSESSMENT