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Question 2 Taxation of Partnership Donald, Ronald and Mick started a supermarket business in Fiji...

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Accounting

Question 2 Taxation of Partnership Donald, Ronald and Mick started a supermarket business in Fiji under a partnership agreement stating profit & Loss sharing ratio of 6:3:1. During the financial year of 2020 the following transactions has taken place amounting to: $ Sales 3,500,000 Sales Returns 69,050 Purchases 1,560,000 Interest on investment 35 000 Advertising 27,000 Fuel-Motor Vehicle (For vehicles used in business) 18,500 Depreciation (For assets used in business) 35,000 Telephone 14,500 Goodwill Amortized 6 000 Freight Inwards 2 000 Utility 12,000 Rent (For renting the shop space) 130,000 FNPF 55,000 Salaries & Wages 370,000 Discount Received 3 500 Purchase Returns 50 000 Bank Charges 9 000 Interest on mortgage 12,500 Accrued Expenses 5 500 Insurance Premiums 8 000 Miscellaneous Expenses 10,000 Income Tax Payable 15 000 Additional Information Closing stock 31/12/2020 $107,000 Opening stock 1/1/2020 $45,000 Tax Rate 20% Donald and Mick are resident of Fiji and Ronald is a non-resident partner. Required:

1. Prepare the Profit and loss statement of partnership business. (10 Marks)

2. Calculate Tax Liability of each partner for the year 2020. (5 Marks

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