Part AMrs. 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 11,600,000Expenses Salaries & Wages 7,600,000Employer NIS Contribution 1,400,000Rent and Rates 2.400,000Interest 500,000Maintenance 120,000Depreciation 550,000Loss on Disposal of Vehicle 80,000Telephone 235,000Electricity 255,000General Expenses 700,000Donations 85,000Provision for Bad Debts 80,000Fines and Penalties 115,000Drawings 105,000 14,225,000 Net Loss 2,625,000Notes to the Income Statement1. $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. 4. 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. 5. 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. 6. 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. 7. 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. 8. Interest accrued was $50,000 for the year. 9. The partnership agreement stated that the partners are to share profit and loss in the ratio 60:40 ( Shine 60% and Rain 40%) 10. Mrs. Shine is a director for a local company and receives net emoluments of $2,250,000 per annum; PAYE of $750,000 was deducted. 11. During the year Mrs. Shine 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. 12. The partners each paid estimated obligations of $20,000 per quarter on March 15, June 15, September 15, and December 15. 13. Mr. Rain received interest income from his financial institution of $150,000 for the year. Mrs. Shine received an interest income of $75,000. 14. PAYE deducted from Mrs. Shine salary from the practice was $352,476 and $109,476 for Mr. Rain. 15. The partners both invested $5,000,000 in the business. The interest rate agreed on capital invested was 8%.16. NIS for Mr. Rain was $240,00 and Mrs. Shine was $210,000. Required i. Compute that income tax payable/refundable for each partner for 2022. Other Contributions payable is not required. ii. Explain to the partners their tax filing requirements for 2022 iii. Mrs. Shine met in a motor vehicle accident and died in January 2024. Mr. Rain asked for your professional consultation on the partnership as a going concern. Please advise
Part A
Mrs. Shine was registered in Jamaica as a sole trader in 2015. To grow her practice Mrs. Shine decided to enter into a
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 Rates 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
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.
4. 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.
5. 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.
6. 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.
7. 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.
8. Interest accrued was $50,000 for the year.
9. The partnership agreement stated that the partners are to share
10. Mrs. Shine is a director for a local company and receives net emoluments of $2,250,000 per annum; PAYE of $750,000 was deducted.
11. During the year Mrs. Shine 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.
12. The partners each paid estimated obligations of $20,000 per quarter on March 15, June 15, September 15, and December 15.
13. Mr. Rain received interest income from his financial institution of $150,000 for the year. Mrs. Shine received an interest income of $75,000.
14. PAYE deducted from Mrs. Shine salary from the practice was $352,476 and $109,476 for Mr. Rain.
15. The partners both invested $5,000,000 in the business. The interest rate agreed on capital invested was 8%.
16. NIS for Mr. Rain was $240,00 and Mrs. Shine was $210,000.
Required
i. Compute that income tax payable/refundable for each partner for 2022. Other Contributions payable is not required.
ii. Explain to the partners their tax filing requirements for 2022
iii. Mrs. Shine met in a motor vehicle accident and died in January 2024. Mr. Rain asked for your professional consultation on the partnership as a going concern. Please advise
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