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Question 3 Ernie and Young formed a partnership on February 1 , 2 0 1 8 to carry on their Accounting business. Each partner contributed
Question Ernie and Young formed a partnership on February to carry on their Accounting business. Each partner contributed $ to the partnership to start up the business. The partnership agreement provides that they will share equally the profits from the partnership. Ernie sold his partnership interest to Dolittle for $ at the end of the fiscal year of the partnership. The income statement from the partnership is as follows: Ernie & Young, Accountants Income Statement For the year ended December Gross Revenue: Expenses: Office Supplies Drafting materials Rent Heat and electricity Office Salaries Charitable donations Depreciation note Partner salaries note Other Income: Gain on sale of shares note Noneligible dividends from Canadian Corporations Net Income: Note : CCA for was $ Note : In each partner drew $ in addition to each receiving a salary of $ Note : The capital gain for tax purposes is the same as the accounting book gain. Prior year financial statements for the partnership provided the following cumulative information for the to fiscal years ended December Required: Compute Ernie's taxable income for Show all components of his taxable income and show all calculations.
Question
Ernie and Young formed a partnership on February to carry on their Accounting business. Each
partner contributed $ to the partnership to start up the business. The partnership agreement
provides that they will share equally the profits from the partnership.
Ernie sold his partnership interest to Dolittle for $ at the end of the fiscal year of the
partnership.
The income statement from the partnership is as follows:
Ernie & Young, Accountants
Income Statement
For the year ended December
Gross Revenue:
Expenses:
Office Supplies
Drafting materials
Rent
Heat and electricity
Office Salaries
Charitable donations
Depreciation note
Partner salaries note
Other Income:
Gain on sale of shares note
Noneligible dividends from Canadian Corporations
Net Income:
Note : CCA for was $
Note : In each partner drew $ in addition to each receiving a salary of $
Note : The capital gain for tax purposes is the same as the accounting book gain.
Prior year financial statements for the partnership provided the following cumulative information for
the to fiscal years ended December
Required: Compute Ernie's taxable income for Show all components of his taxable income and
show all calculations.
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