T&C Printing is a stationery store operated in partnership by Ting and Chong. The partnership agreement provides the following:

$1.$ an annual salary of $$38,500$ to Chong for working full$-$ time in the business.

$2.$ interest to be paid at the rate of $15\%$ per annum on each partner$’$s capital contribution with Ting contributing $$90,000$ and Chong $$30,000$ respectively,

$3.$ interest on any loan or advance by a partner shall be paid by the partnership at the rate of $5\%$ per annum.

Apart from the above, Ting and Chong share the remaining partnership profits and losses equally.

During the year Ting advanced $$15,000$ to the business as working capital on $1$ May $2023.$ 

For the basis period ended $31$ December $2023,$ the Partnership received a profit and loss statement showing the following transactions:

INCOME

$•$ $$185,000$ in trading income,

$•$ $$10,000$ in interest income from OCBC Bank, an approved bank in Singapore.

$•$ $$5,800$ in interest from a non$-$approved bank in Singapore

EXPENSES

$•$ $$60,000$ of operating expenses,

$•$ $$5000$ fine for violating council by laws,

$•$ $$6,000$ donations in cash to an approved Institute of Public Character

Required

a$)$ Calculate the distributable amount and the amount distributed to each partner for the basis period $31$ December $2023.(6$ marks$)$

b$)$ Calculate each partner$’$s assessable income. $(4$ marks$)$

Answer rating: 100% (QA)

a To calculate the distributable amount and the amount distributed to each partner for the basis per... View the full answer