Dave and Mabel Rudd are partners who share profits and losses in the ratio of 4:1 respectively.
Question:
Dave and Mabel Rudd are partners who share profits and losses in the ratio of 4:1 respectively. They run a farm which owns a large property in outback Australia. They are Australian residents.
Cash Receipts Journal
Date | Particulars | Doc No. | Stock sales | Wool sales | Sundry receipts | Total receipts | |
Pens | $ | ||||||
16 March | Sale of sheep (Flea and Infestation) | 001 | 5 | $ 2,500 | $ 2,500 | ||
16 March | Sale of sheep (Include 20% extra) | 002 | 6 | $ 5,760 | $ 5,760 | ||
Total of column | 11 | $ 8,260 | $ 8,260 |
Cash Payments Journal
Date | Particulars | Chq No. | Stock purchases | Upgrade paddocks | Gen farm exps | Stud rams | Sundry payments | Total payments | |
Pens | $ | ||||||||
16 March | Treatment | 100 | $ 300 | $ 300 | |||||
16 March | Weed | 101 | $ 100 | $ 100 | |||||
16 March | Purchase Stud rams | 102 | $ 500 | $ 500 | |||||
16 March | Purchase of Haystack | 103 | $ 500 | $ 500 | |||||
Total of column | $ 900 | $ 500 | $ 1,400 |
Bank ledger account (or statement of cash at bank balance) it only needs the total from the Cash Receipts Journal and Cash Payments Journal
Date | Account | Debit | Credit | Balance |
16 March | Opening Balance | $ 2,200 | $ 2,200 | |
Cash Receipts Journal | $ 8,260 | $ 10,460 | ||
Cash Payments Journal | $ 1,400 | $ 9,060 |
You need a bank reconciliation:
Balance as per the Bank Statement (ie. the money you counted at the end of the game) | $ 8,060 |
Add: Insurance Expense | $ 1,000 |
Or Less: item | |
Balance of bank as per your records (i.e. what your Bank ledger account says) | $ 9,060 |
You need a Sheep Working account (livestock trading account) as taught in class, and a reconciliation of sheep per stocktake:
Livestock stocktake (pens) which you counted at the end of the game | 4 |
Livestock closing balance as per the Sheep Working account | 4 |
If there is a difference as with my illustration then you have to give a plausible explanation of the reason for the difference (study the Sheep Working account example below) |
Sheep Working account
No(pens) | $ | |
Opening stock | 15 | $ 6,000 |
Purchases | 0 | |
Natural increase | 0 | |
Gross Profit | $ 3,860 | |
TOTAL | 15 | $9,860 |
Sales | 11 | $ 8,260 |
Deaths/missing | 0 | |
Rations | 0 | |
Closing stock | 4 | $ 1,600 |
TOTAL | 15 | $9,860 |
Appendix 1
Dave was also employed part-time by a freighting company driving trucks.
The non-primary production transactions that Dave has is as follows. These transactions were included in his personal (separate) bank account.
Receipts
Interest (after TFN tax withheld $46) | $54 |
Payment summary -Gross salary (tax withheld $1,250) | 15,000 |
Payment summary - clothing allowance | 200 |
Payment summary - Transport Workers' Union paid9brackets indicate a payroll deduction) | (100) |
Insurance recovery re losses caused by floods to cover repairs to fences etc (this is primary production activities) | 8,000 |
Payments (fully substantiated)
Fines paid for breach of conservation regulations $500 |
Purchased protective overalls $250 |
1. Calculate the net income of the partnership and the distribution statement.
2. Referring to Appendix 1 calculate taxable income of Dave Rudd showing split between primary production and non-primary production income.
Taxable income and primary and non primary production income
Item | Primary prod $ | Non primary prod $ | Total/taxable income $ |
3. Calculate average offset of Dave Rudd.
4. Estimate Dave Rudd's tax payable after offsets, including averaging offset.
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker