Mrs. Shine was registered in Jamaica as a sole trader in 2015. To grow her practice Mrs. Shine decided to enter into a partnership agreement with Mr. Rain, thus the status of the business was changed in 2021. In 2022, the partnership income statement for Shine & Rain was as follows:   Income Statement for the year ended 31 December 2022 Revenue            11,600,000 Expenses     Salaries & Wages            7,600,000   Employer NIS Contribution            1,400,000   Rent and Rate            2,400,000   Interest                500,000   Maintenance                120,000   Depreciation                550,000   Loss on Disposal of Vehicle                  80,000   Telephone                235,000   Electricity                255,000   General Expenses                700,000   Donations                  85,000   Provision for Bad Debts                  80,000   Fines and Penalties                115,000   Drawings                105,000          14,225,000 Net Loss              2,625,000   Notes to the Income Statement $55,000 of the drawings relate to Mrs. Shine and $50,000 to Mr. Rain Gross Salary for Mrs. Shine was $250,000 per month and $200,000 for Mr. Rain. Both partners worked in the business during the year. The annual allowance was $450,000.   The partners agreed to dispose of an old pick-up truck with a net book value of $350,000 for $400,000. The pick-up had a tax written down value of $300,000. Donations of $60,000 were made to a local political party to fund its campaign. The remainder was donated to an approved local children’s home. The partners could not determine if all their clients would be able to settle their bills on time so a general provision of $60,000 was made to cushion the effect of the any debt going bad. The balance related to a particular client that had gone bankrupt, which the firm was unable to collect after several attempts. Fines and Penalties include traffic offences of $5,000 and penalties of $10,000 for non-filing of VAT returns for the period January – March 2022. Interest accrued was $50,000 for the year. The partnership agreement stated that the partners are to share profit and loss in the ratio 60:40 ( Shine 60% and Rain 40%) Shine is a director for a local company and receives net emoluments of $2,250,000 per annum; PAYE of $750,000 was deducted. During the year Mr. Rain rented his private dwelling for $150,000 per month for 8 months. He also received gross income from teaching law at a university of $6,000,000 per year. The partners each paid estimated obligations of $20,000 per quarter on March 15, June 15, September 15, and December 15. Rain received interest income from his financial institution of $150,000 for the year. Mrs. Shine received an interest income of $75,000. PAYE deducted from Mrs. Shine salary from the practice was $352,476 and $109,476 for Mr. Rain. The partners both invested $5,000,000 in the business. The interest rate agreed on capital invested was 8%. NIS for Mr. Rain was $240,00 and Mrs. Shine was $210,000.   Required Calculate the adjusted profit / loss

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Mrs. Shine was registered in Jamaica as a sole trader in 2015. To grow her practice Mrs. Shine decided to enter into a partnership agreement with Mr. Rain, thus the status of the business was changed in 2021.

In 2022, the partnership income statement for Shine & Rain was as follows:

 

Income Statement for the year ended 31 December 2022

Revenue

 

         11,600,000

Expenses

   

Salaries & Wages

           7,600,000

 

Employer NIS Contribution

           1,400,000

 

Rent and Rate

           2,400,000

 

Interest

               500,000

 

Maintenance

               120,000

 

Depreciation

               550,000

 

Loss on Disposal of Vehicle

                 80,000

 

Telephone

               235,000

 

Electricity

               255,000

 

General Expenses

               700,000

 

Donations

                 85,000

 

Provision for Bad Debts

                 80,000

 

Fines and Penalties

               115,000

 

Drawings

               105,000

         14,225,000

Net Loss

 

           2,625,000

 

Notes to the Income Statement

  1. $55,000 of the drawings relate to Mrs. Shine and $50,000 to Mr. Rain
  2. Gross Salary for Mrs. Shine was $250,000 per month and $200,000 for Mr. Rain. Both partners worked in the business during the year.
  3. The annual allowance was $450,000.

 

  1. The partners agreed to dispose of an old pick-up truck with a net book value of $350,000 for $400,000. The pick-up had a tax written down value of $300,000.
  2. Donations of $60,000 were made to a local political party to fund its campaign. The remainder was donated to an approved local children’s home.
  3. The partners could not determine if all their clients would be able to settle their bills on time so a general provision of $60,000 was made to cushion the effect of the any debt going bad. The balance related to a particular client that had gone bankrupt, which the firm was unable to collect after several attempts.
  4. Fines and Penalties include traffic offences of $5,000 and penalties of $10,000 for non-filing of VAT returns for the period January – March 2022.
  5. Interest accrued was $50,000 for the year.
  6. The partnership agreement stated that the partners are to share profit and loss in the ratio 60:40 ( Shine 60% and Rain 40%)
  7. Shine is a director for a local company and receives net emoluments of $2,250,000 per annum; PAYE of $750,000 was deducted.
  8. During the year Mr. Rain rented his private dwelling for $150,000 per month for 8 months. He also received gross income from teaching law at a university of $6,000,000 per year.
  9. The partners each paid estimated obligations of $20,000 per quarter on March 15, June 15, September 15, and December 15.
  10. Rain received interest income from his financial institution of $150,000 for the year. Mrs. Shine received an interest income of $75,000.
  11. PAYE deducted from Mrs. Shine salary from the practice was $352,476 and $109,476 for Mr. Rain.
  12. The partners both invested $5,000,000 in the business. The interest rate agreed on capital invested was 8%.
  13. NIS for Mr. Rain was $240,00 and Mrs. Shine was $210,000.

 

Required

Calculate the adjusted profit / loss

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