QUESTION 3 PARTNERSHIP NET INCOME AND TAX LIABILITY

Scenario Partnership, pizza bar

Jay Jays is a large pizza bar restaurant chain of 3 shops in Melbourne (located city, north and south) owned by Jagjeet and Jiera. The books of account for 2020 income year reveal the following:

Sales Closing stock Opening Stock Purchases Various business expenses

- Advertising 6,000 - Electricity 12,000 - Insurance 9,000 - Interest on loan - premises 160,000 - Rent 100,000 - Staff wages 300,000 - Telephone 2,000 - Other expenses 121,000 - Bad Debt 1,000 - Depreciation 100,000 - Repairs 15,000 - Tax agent expenses Salaries - Salary for Jagjeet - Salary for Jiera 5,000

52,000 31,200

Jagjeet and Jieras partnership agreement provides that p

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