QUESTION 3 (25 MARKS: 45 MINUTES) Fresh Frozen Food is a partnership operated since 2013 by Mastura. Hanani and Fatin. The accounting period of the partnership ends on 31 December annually. All partners agreed to distribute the partnership's profit and bear the loss based on their capital contribution portion. Besides the partners, there are two employees in the partnership. The partnership agreement specifies the following information: Mastura Hanani Fatin Capital contribution 100,000 60,000 60,000 Salary per month 6,000 5,000 5,000 Profit on capital per annum 5% 3% 3% The employees are paid gross monthly salary of RM1,300 each. The partnership contributes monthly Employee Provident Fund (EPF) of RM250 for each employee. In early August 2020, Fatin passed away due to serious illness. All contributions by Fatin was returned to his family. Mastura and Hanani maintained their contribution portion and revised the partnership agreement as follows: Salary per month Profit on capital per annum Profit or loss sharing ratio Mastura 6,000 5% 50% Hanani 6,000 5% 50% The income statement for the partnership for the year ended 31 December 2020 is as follows: RM 1,150,000 (517,500) 632,500 Fresh Frozen Food Income Statement For the Year Ended 31 December 2020 Note RM Sales 1 Cost of Goods Sold Gross Profit Operating Expenses Instalment paid to Public Bank 2 (18.000) Salary 3 (209,200) Repair 4 (6,000) Insurance 5 (15,600) Profit paid 6 (10,850) Office expenses 7 (25,800) Equipment 8 (8.400) Operating expenses Net profit from business operation Other Income 9 Total Net Profit OaN (293,850) 338,650 75,000 413,650 Notes to the account: 1. Sales include RM10,000 being the amount of debt by clients who suffer business loss due to Covid-19 pandemic beginning from April 2020. 2. It is the 2020 total hire purchase monthly instalment for the partnerships van which was bought on 1 September 2018 with deposit of RM30,000. The cost of the van is RM120,000 and the hire purchase agreement will last for seven years. 3. Salary includes partners and employees' salaries as well as EPF contributions by partnership 4. Repair expense comprises RM2,000 to repair the partnership van and Hanani's car amounting to RM4,000. 5. Insurance comprises premium paid as follows: Medical insurance (all partners) Vehicle insurance (partnership van) 6. It is profit on partners' capital contribution and Mastura's personal loan. RM 14,400 1,200 7. Office expenses include: RM Purchase of laptop for Fatin's daughter in July 2020 1,500 Penalty for partnership's traffic summon (van) 300 Painting of small building gazette as a heritage site by the Government 6,000 Depreciation 18,000 8. Purchased of five equipment for business usage for RM900, RM1,300, RM1,800, RM2,000 and RM2,400 each. 9. The income was from dropship activities run by Fatin (40% is Fatin's personal portion) while the balance belong to the partnership. Additional information: i. Capital allowance for current year of assessment was RM19,000 not including the equipment. Unabsorbed balancing allowance from previous years was RM13,000 ii. REQUIRED: With reference to the Income Tax Act 1967 and the relevant Public Rulings issued by the Inland Revenue Board of Malaysia, determine the total income of each partner for the year of assessment 2020. Support your answer with relevant computations. (25 Marks) QUESTION 3 (25 MARKS: 45 MINUTES) Fresh Frozen Food is a partnership operated since 2013 by Mastura. Hanani and Fatin. The accounting period of the partnership ends on 31 December annually. All partners agreed to distribute the partnership's profit and bear the loss based on their capital contribution portion. Besides the partners, there are two employees in the partnership. The partnership agreement specifies the following information: Mastura Hanani Fatin Capital contribution 100,000 60,000 60,000 Salary per month 6,000 5,000 5,000 Profit on capital per annum 5% 3% 3% The employees are paid gross monthly salary of RM1,300 each. The partnership contributes monthly Employee Provident Fund (EPF) of RM250 for each employee. In early August 2020, Fatin passed away due to serious illness. All contributions by Fatin was returned to his family. Mastura and Hanani maintained their contribution portion and revised the partnership agreement as follows: Salary per month Profit on capital per annum Profit or loss sharing ratio Mastura 6,000 5% 50% Hanani 6,000 5% 50% The income statement for the partnership for the year ended 31 December 2020 is as follows: RM 1,150,000 (517,500) 632,500 Fresh Frozen Food Income Statement For the Year Ended 31 December 2020 Note RM Sales 1 Cost of Goods Sold Gross Profit Operating Expenses Instalment paid to Public Bank 2 (18.000) Salary 3 (209,200) Repair 4 (6,000) Insurance 5 (15,600) Profit paid 6 (10,850) Office expenses 7 (25,800) Equipment 8 (8.400) Operating expenses Net profit from business operation Other Income 9 Total Net Profit OaN (293,850) 338,650 75,000 413,650 Notes to the account: 1. Sales include RM10,000 being the amount of debt by clients who suffer business loss due to Covid-19 pandemic beginning from April 2020. 2. It is the 2020 total hire purchase monthly instalment for the partnerships van which was bought on 1 September 2018 with deposit of RM30,000. The cost of the van is RM120,000 and the hire purchase agreement will last for seven years. 3. Salary includes partners and employees' salaries as well as EPF contributions by partnership 4. Repair expense comprises RM2,000 to repair the partnership van and Hanani's car amounting to RM4,000. 5. Insurance comprises premium paid as follows: Medical insurance (all partners) Vehicle insurance (partnership van) 6. It is profit on partners' capital contribution and Mastura's personal loan. RM 14,400 1,200 7. Office expenses include: RM Purchase of laptop for Fatin's daughter in July 2020 1,500 Penalty for partnership's traffic summon (van) 300 Painting of small building gazette as a heritage site by the Government 6,000 Depreciation 18,000 8. Purchased of five equipment for business usage for RM900, RM1,300, RM1,800, RM2,000 and RM2,400 each. 9. The income was from dropship activities run by Fatin (40% is Fatin's personal portion) while the balance belong to the partnership. Additional information: i. Capital allowance for current year of assessment was RM19,000 not including the equipment. Unabsorbed balancing allowance from previous years was RM13,000 ii. REQUIRED: With reference to the Income Tax Act 1967 and the relevant Public Rulings issued by the Inland Revenue Board of Malaysia, determine the total income of each partner for the year of assessment 2020. Support your answer with relevant computations. (25 Marks)