Leo, Kesho and Kutwa trade in electrical goods and as partners in Leo Unincorporated. They share profits and losses equally. The following details in the draft accounts regarding their profit and loss status as at 31 December 2020 have been provided: Debits Sh. Credits Sh. Office expenses General expenses Salaries and wages Show room expenses Rents, rates and taxes Printing and stationery Instalment tax paid Advertising Legal charges Interest on capital Depreciation Bad debts Commission to partners Donation for poverty Property taxes Electricity expenses General reserve 408,000 188,000 560,000 234,000 300,000 128,000 90,000 146,000 164,000 420,000 184,000 136,000 160,000 200,000 24,000 92,000 240,000 Gross profit Interest earned Discounts received Other receipts Rent income Capital gain on shares. 2,600,000 240,000 160,000 300,000 264,000 200,000 The partners provided additional information as follows: 1. Closing stock had been understated by Sh.30, 000 as at 31 December 2019. 2. Leo was paid Sh.100, 000 as salary (included in salaries and wages) and PAYE Sh.31,000 was paid on it. 3. The firm was fined Sh.30, 000 for breach of regulations. This is included in legal charges. 4. Interest on capital was Sh.160, 000 to Leo, Sh.120, 000 to Kesho and sh.140, 000 to Kutwa. 5. Commission to partners include sh.90, 000 to Leo and the balance to Kutwa. 6. Capital allowances had been agreed at sh.1, 800,000 with the tax authorities. Compute the total income (loss) from the partnership business as at 31st December 2020.
Leo, Kesho and Kutwa trade in electrical goods and as partners in Leo Unincorporated. They share profits and losses equally. The following details in the draft accounts regarding their
|
|
Debits Sh. |
|
Credits Sh. |
|
Office expenses General expenses Salaries and wages Show room expenses Rents, rates and taxes Printing and stationery Instalment tax paid Advertising Legal charges Interest on capital Commission to partners Donation for poverty Property taxes Electricity expenses General reserve |
408,000 188,000 560,000 234,000 300,000 128,000 90,000 146,000 164,000 420,000 184,000 136,000 160,000 200,000 24,000 92,000 240,000 |
Gross profit Interest earned Discounts received Other receipts Rent income |
2,600,000 240,000 160,000 300,000 264,000 200,000 |
The partners provided additional information as follows:
1. Closing stock had been understated by Sh.30, 000 as at 31 December 2019.
2. Leo was paid Sh.100, 000 as salary (included in salaries and wages) and PAYE Sh.31,000 was paid on it.
3. The firm was fined Sh.30, 000 for breach of regulations. This is included in legal charges.
4. Interest on capital was Sh.160, 000 to Leo, Sh.120, 000 to Kesho and sh.140, 000 to Kutwa.
5. Commission to partners include sh.90, 000 to Leo and the balance to Kutwa.
6. Capital allowances had been agreed at sh.1, 800,000 with the tax authorities.
Compute the total income (loss) from the partnership business as at 31st December 2020.
Step by step
Solved in 2 steps with 2 images
Show allocation of
by Bartleby Expert
