Question A

Bert and Ernie $($Party Planners$)$

Bert and Ernie have a partnership and are equal partners running a business as

party planners and event co$-$ordinators focusing on children's parties and events.

They provide a complete service including arranging the food, decorations,

entertainment and party goods. They also hired out some of their equipment when it

was not being used in their own business.

The accounts of Bert and Ernie for the year ended $30$ June $2023$ are as follows:

Receipts

$

Cash banked in respect of parties planned and hosted

$321,000$

This included $$11,250$ which was from parties completed last

financial year. Functions which were completed in the

current year but not yet paid total $$7,800.$

Hire of equipment

$32,400$

Interest on drawings $($$$340$ for Bert and $$170$ for Ernie$)$

$510$

Interest received

$1,350$

Expenditure

Purchases

$63,240$

Staff salaries $($this amount included $$19,000$ paid to Bert's

cousin, Bob, who works part$-$time and gets paid $$4,000$ more

than a non$-$related employee who works the same hours

doing a similar job$)$

$92,000$

Staff superannuation

$8,280$

Provision for annual leave

$7,080$

Salaries for Bert and Ernie for Bert and $$40,000$ for

Ernie$)$

$100,000$

Page $1$ of $9$

Superannuation for Bert and Ernie for Bert and

$$3,600$ for Ernie$)$

$9,000$

Interest on capital $($ $$790$ for Bert and $$540$ for Ernie$)$

$1,330$

Repair of a bouncy castle

$890$

Purchase of a bubble machine

$640$

Legal fees

$2,500$

Additional information

$($a$)$ The legal fees arose as a result of Bert and Ernie consulting their lawyers and

accountants to advise them if in future they should change their structure to a

company.

$($b$)$ Annual leave actually paid during the year was $$3,400.$

$($c$)$ $$1,020$ of the superannuation for staff remained unpaid at $30$ June $2023.$

$($d$)$ They are an SBE for tax purposes

Required:

Calculate the net income of the partnership.

Determine the partnership distribution and calculate the

taxable income and net tax payable by each partner.