SCHOOL OF ACCOUNTANCY

UNIVERSITI UTARA MALAYSIA

BKAT 2013 PRINCIPLES OF TAXATION
TUTORIAL 7 PARTNERSHIP
Date of Submission: 31 May 2015
QUESTION 1
Tan and Mat are partners of several fast food restaurants in Kedah since 2001. They had
contributed RM500,000 each for the partnership and received 5% interest annually. They are also
paid a monthly salary of RM10,000 each. They also share the profit earned by the partnership
equally.
For the year ended 2015 the provisional adjusted profit were RM480,000.
On 1 March 2015, Joe joined the partnership with his contribution of RM300,000 for the
partnership. They agreed that the salary for the existing partner remains the same while Joe will
receive RM7,000 per month. The interest on the partners contribution remains the same. The
profit ratios are 40%, 40% and 20% for Tan, Mat and Joe respectively.
Mat left on 1 June 2015 but Tan and Joe remained in the partnership. The revised partnership
agreement states that the current partners will receive salaries of RM12,000 for Tan and
RM8,000 for Joe. The new interest rate for capital contributed will be at 12% per annum. The
profit ratios of the partnership are 60% and 40% for Tan and Joe respectively.
For the year 2015, the partnership had unabsorbed capital allowance of RM10,000 and current
year capital allowance of RM40,000.
On 30 September 2015, the partnership had contributed RM3,000 to an approved institution.
There was an empty space in one of the operating outlet owned by the partnership and the annual
income earned from letting the space was RM24,000.
The partnership paid RM2,100 on 3 January 2015 for the cost of Mats house maintenance.

REQUIRED:
Compute the total income for each partner for the year of assessment 2015.

QUESTION 2
SLN Enterprise is a partnership between Samad and Leman established since five (5) years ago.
The accounting period of the partnership ended 31 December. The partnership agreement shows
that profit (loss) distributed equally among the partners. Income statement of Permai Enterprise
for the year ended 31 December 2015 is as follows:
Permai Enterprise
Income Statement
For the Year Ended 31 December 2015
RM
Sales
Less Cost of sale
Gross profit
Less Expenditure:
Partners salary
(Note 1)
Partners bonus
(Note 2)
Domestic expenses:
Shuib
Leman
Administrative and management
Repair
(Note 3)
Donation
(Note 4)
Sundry expenses
(Note 5)
Premise utility
Depreciation
Net income from business operation

60,000
10,000
7,500
2,500
15,000
1,000
480
2,000
1,100
10,000

Other source of income:

Rental
Total net profit (loss)

2.

109,580
10,920
4,500
15,420

Notes to the account:

1.

RM
400,500
280,000
120,500

Partners salary:
Shuib
Leman
Nawab

RM
30,000
20,000
10,000

Nawab
Leman

RM
6,000
4,000

Partners bonus:

3. Repair expense is for rewiring on business premise.

4. On 12 February 2015, the partnership donated RM480 to an approved institution (receipt
attached).
5. Sundry expenses include cash stolen from cashier machine amounted RM1,500.

Additional information:
i.

On 30 April 2015, Noh joined SLN Enterprise.

ii.

Based on a new partnership agreement, profit (loss) to be distributed equally among each
partner.
iii. Capital allowance for year assessment 2015 are as follows:
RM
Fitting and furniture
1,500
Machine
3,000
Office equipment
2,200
iv. Balancing charge for the partnership in year 2015 amounted to RM900.
REQUIRED:

(a)

Compute the statutory income of each partner for year assessment 2015.
(b) Discuss the effect on the divisible income if Nawab joined the partnership on 1 September
2015 (Support your answer with computation).