Allan, Bryan and Catty are partners in a partnership engaging in a food catering business. The terms of the partnership agreement until 30 September 2021 were as follows: Allan Bryan RM Catty RM RM Capital contribution Salary per annum Interest on capital per annum Partners’ private expenses 90,000 60,000 5% 105,000 75,000 72,000 54,000 5% 5% 10,000 9,000 7,000 On 30 September 2021, Bryan withdrew as a partner. Upon the withdrawal of Bryan, the interest on capital for Allan and Catty was revised to 4% per year with the other terms remaining the same. The profit or loss is shared equally among the partners throughout the whole year. The provisional adjusted income for the year ended 31 December 2021 was RM280,926. The capital allowance on the plant and machinery was RM4,000. The partnership made a cash donation of RM6,000 to an approved institution on 30 June 2021. Required: Compute the divisible income for the partnership and the total income of the partners for the year of assessment 2021. (a) (b) Explain the tax treatment for the cash donation of RM6,000 made by the partnership
Allan, Bryan and Catty are partners in a partnership engaging in a food catering business. The terms of the partnership agreement until 30 September 2021 were as follows: Allan Bryan RM Catty RM RM Capital contribution Salary per annum Interest on capital per annum Partners’ private expenses 90,000 60,000 5% 105,000 75,000 72,000 54,000 5% 5% 10,000 9,000 7,000 On 30 September 2021, Bryan withdrew as a partner. Upon the withdrawal of Bryan, the interest on capital for Allan and Catty was revised to 4% per year with the other terms remaining the same. The profit or loss is shared equally among the partners throughout the whole year. The provisional adjusted income for the year ended 31 December 2021 was RM280,926. The capital allowance on the plant and machinery was RM4,000. The partnership made a cash donation of RM6,000 to an approved institution on 30 June 2021. Required: Compute the divisible income for the partnership and the total income of the partners for the year of assessment 2021. (a) (b) Explain the tax treatment for the cash donation of RM6,000 made by the partnership
Accounting (Text Only)
26th Edition
ISBN:9781285743615
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter12: Accounting For Partnerships And Limited Liability Companies
Section: Chapter Questions
Problem 12.15EX
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Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text:Question 5
Allan, Bryan and Catty are partners in a partnership engaging in a food catering business. The terms
of the partnership agreement until 30 September 2021 were as follows:
Allan
Bryan
Catty
RM
RM
RM
Capital contribution
Salary per annum
Interest on capital per annum
Partners' private expenses
90,000
60,000
105,000
75,000
72,000
54,000
5%
5%
5%
10,000
9,000
7,000
On 30 September 2021, Bryan withdrew as a partner. Upon the withdrawal of Bryan, the interest on
capital for Allan and Catty was revised to 4% per year with the other terms remaining the same. The
profit or loss is shared equally among the partners throughout the whole year.
The provisional adjusted income for the year ended 31 December 2021 was RM280,926. The capital
allowance on the plant and machinery was RM4,000. The partnership made a cash donation of RM6,000
to an approved institution on 30 June 2021.
Required:
Compute the divisible income for the partnership and the total income of the partners for the
year of assessment 2021.
(a)
(b)
Explain the tax treatment for the cash donation of RM6,000 made by the partnership
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