TAXATION OF PARTNERSHIP IN TRINIDAD & TOBAGO Mendez and Marshall are in partners
ID: 2517492 • Letter: T
Question
TAXATION OF PARTNERSHIP IN TRINIDAD & TOBAGO
Mendez and Marshall are in partnership sharing profits and losses 60:40.
The following is the trial balance as at 30 June 2010.
Particulars
Debit $
Credit $
Buildings (Cost $750,000.00)
500,000.00
Fixtures at cost
110,000.00
Provision for depreciation: Fixtures
33,000.00
Debtors
162,430.00
Creditors
111,500.00
Cash at bank
67,700.00
Stock at 30 June 2009
419,790.00
Sales
1,236,500.00
Purchases
854,160.00
Carriage outwards
12,880.00
Discounts allowed
1,150.00
Loan interest: King
40,000.00
Office expenses
24,160.00
Salaries and wages
189,170.00
Bad debts
50,300.00
Provision for bad debts
40,000.00
Loan from J. King
400,000.00
Capitals: Mendez
350,000.00
Marshall
295,000.00
Current accounts: Mendez
13,060.00
Marshall
29,800.00
Drawings: Mendez
64,000.00
Marshall
56,500.00
Notes
a. Stock, 30 June 2010, $563,400.00
b. Expenses to be accrued: Office Expenses $9,600.00, Wages $2,000.00
c. Depreciate fixtures and buildings using 10 percent on the reducing balance basis
d. The partners agree institute a capital allowance policy similar to the depreciation policy
e. Partnership salary of $8,000.00 to Mendez not yet entered
f. Marshall took 15% of the purchases during the year for his extended family
g.Marshall’s wife took out a loan from a family friend John King where she made a down payment on Marshall’s personal car. Note that this car is used in the business occasionally.
a. Prepare a trading and profit and loss account for the year ended 30 June 2010, and then share the profit using the profit sharing ratio. (10 Marks)
b. Compute the tax liability for Mendez and Marshall for the year of assessment 2010. (5 Marks)
I am not sure what the additional information needed is? please specify
Particulars
Debit $
Credit $
Buildings (Cost $750,000.00)
500,000.00
Fixtures at cost
110,000.00
Provision for depreciation: Fixtures
33,000.00
Debtors
162,430.00
Creditors
111,500.00
Cash at bank
67,700.00
Stock at 30 June 2009
419,790.00
Sales
1,236,500.00
Purchases
854,160.00
Carriage outwards
12,880.00
Discounts allowed
1,150.00
Loan interest: King
40,000.00
Office expenses
24,160.00
Salaries and wages
189,170.00
Bad debts
50,300.00
Provision for bad debts
40,000.00
Loan from J. King
400,000.00
Capitals: Mendez
350,000.00
Marshall
295,000.00
Current accounts: Mendez
13,060.00
Marshall
29,800.00
Drawings: Mendez
64,000.00
Marshall
56,500.00
Explanation / Answer
Trading and P&L Account Particulars Amount Particulars Amount To Opening Stock 419790 By Sales 1236500 To Purchases less drawings (854160*.15) 726036 By Closing Stock 563400 To Gross profit 654074 Total 1799900 Total 1799900 To Carriage Outward 12880 By Gross Profit 654074 To Discount 1150 To Loan Interest 40000 To Office expenses+ accrued 33760 To Salary & wages+accrued 191170 To Bad debts 50300 To Depreciation (50000+7700) 57700 To Interest on capital 64500 To Salary of partners 8000 To Net Profit transfer to partners Mendez 60% 116768 Marshell 40% 77846 194614 Total 654074 Total 654074
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