Determine the net income of the rocketfone

Reference no: EM131369622

Problem -

Wiley Coyote also operates a mobile telephone dealership, Rocketfone, in partnership with Ralph Sheepdog from premises owned by Wiley. A partnership agreement specifies that all income and losses are to be shared in the ratio of 2:1. Transactions recorded by the partnership during 2015/16 were as follows.

Receipts	$
Income from trading	396,000
Fully franked dividends from Investopedia Ltd	28,000
Proceeds from sale of shares in Lamb Supreme Ltd*	7,000

Payments
Trading stock and overheads	84,000
Salary paid to Wiley	75,000
Salary to Anita Coyote**	45,000
Rent paid to Wiley (includes $30,000 paid on 30 June 2016 for 12 months in advance)	55,000
Interest paid to Ralph on loan	17,000
Interest on capital paid to Wiley	15,000
Interest on capital paid to Ralph	12,000
Superannuation contributed on behalf of Wiley	24,000

* the shares had been purchased in 2012 for $1,000

** Thecommissioner has issued a private ruling indicating that a salary of $45,000 was reasonable.

Required: With full explanation:

(i) Determine the net income of the Rocketfone;

(ii) Determine the distribution of the net income to the partners: and

(iii) List any other items that you believe should be considered in the preparation of Wiley's tax return.

Reference no: EM131369622

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len1369622

1/24/2017 3:52:43 AM

I have attached the question in file. Please include all workings as well. Wiley Coyote also operates a mobile telephone dealership, Rocketfone, in partnership with Ralph Sheepdog from premises owned by Wiley. Determine the net income of the Rocketfone.

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