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Wendy and Charles are in partnership operating a restaurant. They share profits and losses in the ratio 7 0 : 3 0 . The following

Wendy and Charles are in partnership operating a restaurant. They share profits and losses in the ratio 70:30. The following is the partners income statement for 2020.
Wendy and Charles
Income statement for the Year Ending 31 December 2020
$
Operating sales Revenue....................................................................................... 13,500,000
Less Cost of Sales:
Beginning Inventory... 1,400,000
Purchases of Inventory... 3,600,000
Cost of Inventory Available for Sale 5,000,000
Less Ending Inventory... 2,000,000
Cost of Sales.......................................................................................................... (3,000,000)
Gross Income........................................................................................................ 10,500,000
Less Operating Expenses
Electricity........................................................................... 240,000
Rates................................................................................... 160,000
Delivery Expense............................................................... 300,000
Wages and Salaries... 1,500,000
Depreciation of Building and Kitchen Equipment 500,000 Penalty on GCT for not paying over Tax on time 70,000
Total Operating Expenses.................................................................................. 2,770,000 Net Operating Income........................................................................................ 8,730,000
Additional Information
1. $50,000 of the delivery expenses were for Wendys private use.
2. Capital allowances have been computed at $580,000.
3. Charles is 70 years and received pension income of $25,000 per month.
4. Wendy received professional fees for consultancy work done gross of $250,000.
5. During 2020, Wendy and Charles paid estimated tax of $250,000 and $100,000, respectively.
6. $800,000 of the $1,500,000 salary was paid to Charles.
You are required to:
(a) Show the partnership adjusted profit statement and the partners annual returns

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