Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 6 - Week 12 (11 marks) Richard is a retired solicitor. His wife Tracy is a retired school teacher. Both wish to remain active

image text in transcribed

Question 6 - Week 12 (11 marks) Richard is a retired solicitor. His wife Tracy is a retired school teacher. Both wish to remain active and they invest in a gift shop that is to be managed by their daughter Alice, who is aged 35. They forma partnership of three called "Alice's Gift Shop" Richard and Tracy contributed $40,000 each to fund the purchase of the shop. The partnership agreement provides . Both Richard and Tracy are to receive interest at the rate of 10% p.a. on their capital contribution of $40,000. Alice will receive a salary of $25,000 for the management of the shop, as well as superannuation contributions of $6,000 A car will be leased by the business and provided to Alice. All profits and losses are to be shared equally between the three partners. The accounts for this income year show the following: 240,000 Income (5) Sales (excluding GST) Expenses (5) Cost of goods sold Interest on capital paid to Richard and Tracy Salary to Alice 130,000 8.000 25,000 6,000 Superannuation to Alice Lease payments on car (excluding GST) Other deductible operating expenses (excluding GST) 7,000 14,000 purposes. The leased car was used 80% of the time for business and 20% of the time for pri Required: With reference to the facts above: A.Calculate the net income of the partnership B.Show the allocation of net income to each of the three partners. C.You must refer to relevant legislation and/or case law in your

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

A Non-Technical Guide To International Accounting

Authors: Roger Hussey, Audra Ong

1st Edition

1946646865, 9781946646866

More Books

Students also viewed these Accounting questions

Question

=+a) Student ratings of an instructor on a 5 point Likert scale.

Answered: 1 week ago