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Partnerships – Taxation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Partnerships – Taxation

  • This topic has 6 replies, 2 voices, and was last updated 2 months ago by JillyB.
Viewing 7 posts - 1 through 7 (of 7 total)
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  • December 1, 2022 at 8:29 am #673009
    boaz7bm
    Participant
    • Topics: 7
    • Replies: 7
    • ☆

    Peter and Jane have been in partnership for many years preparing accounts to 31 July each year and sharing profits equally. On 1 September 2020, they changed their profit-sharing agreement so that peter was entitled to a salary of £9000 each year and the remaining profits were then split two parts to Peter and three parts to Jane. The partnership made a trading profit of £96,000 in the year to 31 July 2021.

    What is Peter’s taxable trading profit for the tax year 2021/22 ?

    December 1, 2022 at 3:31 pm #673042
    JillyB
    Moderator
    • Topics: 0
    • Replies: 186
    • ☆☆

    Why are you asking me this question? To be honest I know the answer – have you tried the question and cannot understand your answer?

    December 1, 2022 at 4:25 pm #673054
    boaz7bm
    Participant
    • Topics: 7
    • Replies: 7
    • ☆

    Yes, I have tried it but I am not getting the right answer I am getting the answer as £47400. But the answer is given as £44150. Please Can you explain me this question.

    December 2, 2022 at 11:10 am #673110
    JillyB
    Moderator
    • Topics: 0
    • Replies: 186
    • ☆☆

    I get £44150 as well
    The accounting period needs to be split into 2 periods – 1.8.20 to 31.8.20 – when they shared profits equally. 11/12 x 96,000 is £8000 so peters share is £4000.

    The second period is the remaining 11 months.
    Peter is entitled to a salary – 11/12 x 9000 which is £8250
    96,000 less £8,000 less £8250 leaves a profit of £79,750 to be split 2:3 – Peter’s share is £31,900
    Total income for Peter is 8,000+8250+31900 = 44150

    December 2, 2022 at 6:55 pm #673145
    boaz7bm
    Participant
    • Topics: 7
    • Replies: 7
    • ☆

    Thank you so much. Means a lot
    Your explanation is so understanding.

    December 2, 2022 at 6:58 pm #673146
    boaz7bm
    Participant
    • Topics: 7
    • Replies: 7
    • ☆

    An error 11/12 x 96,000 is £8800. But Thank you very much for your support

    December 4, 2022 at 12:57 pm #673312
    JillyB
    Moderator
    • Topics: 0
    • Replies: 186
    • ☆☆

    No worries

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