Chapter 7 Partnerships TX-UK FA2023
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For example 1, how can you tell that the trading income of £18,000 is adjusted trading income (that partners’ Salaries has been added back)?
If it is not, does that means we should not take away the salaries from it? as that will be double deduction (one from income statement and one from us).
The salary of henry was shared why?
it should be deducted from #120,000 – #24,000 = #96,000
31 July 2023 – #96,000 * 0.3 * (4/12) = #9,600.00
1 August 2023- #96,000*0.2* (8/12) = #12,800.00
Total = #22,400.00
Why was the 8,000.00 of his salaries ignored, Period up to July 31?
because the the salary was allocated to henry after 1 august. the first 4 months there was no any salary.
hence the salary will only apply on the last 8 months and you have to apportion it 8/12.
i hope this explanation helped.
4 months profits 40000
8 months profits 80000
out of annual 120000
before change
28000 12000 = 4 months = 40,000
after change
64000 16000 = 8 months = 80,000
64000 is the the 80% of Elizabeth for 8 months profits after change. So proportionally 16000 is Henrys. Why Henry has 12800 then in your calculations?
figured out that we deducted salaries from profits