Assignment 3-4

Price Associates is a partnership between Kang and Kong. They share profit and loss
equally. The profit and loss amount for the year ended 31 December 2010 was as
follows:

RM RM RM
Trading income 1,730,000

Less :
Revenue expense 700,000
Depreciation 60,000
Entertainment to client (related to sales) 40,000
General provision for doubtful debts 20,000
Partnership expense :
Salary – Kang 8,000
Salary – Kong 24,000
Salary – Lim 12,000
Salary – Koh 7,500 51,500
Interest on capital - Kang 1,500
Interest on capital – Kong 500
Interest on capital – Lim 1,000
Interest on capital – Koh 625 3,625
Food from the business consumed by Kang 3000 (878,125)
NET PROFIT 851,875

Additional Information
a. On 1 May 2010, Kang has decided to retire from partnership. To fulfill the
requirement of partnership at least two or more person for partners, Lim was
entered. Meanwhile Koh has entered as partners on 1 August 2010.
b. They have share the profit and loss equally after admission and retirement of
partner.
c. Other incomes beside of the partnership income are :

Partner Rental Interest

Kang RM6,000 RM2,500
Kong RM14,400 -
Lim RM3,000 RM1,000
Koh - RM650

REQUIRED
Compute the Total Income for Kang, Kong, Lim and Koh for the y/a 2010
 Computatian of divisible income for Price Associates y/a 2010

RM RM
Net profit 851,875
Add: Partner's Remuneration
Salary(partners)
Kang 8,000
Kong 24,000
Lim 12,000
Koh 7,500 51,500
Interest on Capital
Kang 1,500
Kong 500
Lim 1,000
Koh 625 3,625
Personal Expenses
Food from the business consumed by Kang 3,000

Expenses not allowable / any item :

Depreciation 60,000
General provision for doubtful debts 20,000

PROVISIONAL ADJUSTED INCOME 990,000

Less:Section 55(3)
Partners salary (51,500)
Interest on capital (3,625)
Personal expenses (3,000)
DIVISIBLE INCOME 931,875
 Computation of total income for partners : y/a 2010

Kang Kong Lim Koh

Salary of Partners 8,000 24,000 1,200 7,500
Interest on capital 1,500 500 1,000 625
Personal expenses 3,000
Divisible income 155,313 401,224 245,911 129,427
ADJUSTED INCOME 167,813 425,724 258,911 137,552
(+) Other incomes
Sec 4(c) : Interest 2,500 - 1,000 650
Sec 4(d) : Rental 6,000 14,400 3,000 -
AGGREGATE INCOME / 176,313 440,124 262,911 138,202
TOTAL INCOME

Divisible income

Kang : 931,875 x 1/2 x 4/12

= 155,313

Kong : (931,875 x 1/2 x 4/12) + (931,875 x 1/2 x 3/12) +

(931,875 x 1/3 x 5/12)
= 155,313 + 116,484 + 129,427
= 401,224

Lim : (931,875 x 1/2 x 3/12) + (931,875 x 1/3 x 5/12)

= 116,484 + 129,427
= 245,911

Koh : 931,875 x 1/3 x 5/12

= 129,427

kang : kong kong : lim kong : lim : koh

1/1/2010 1/5/2010 1/8/2010 31/12/2010

4 bln 3 bln 5 bln