Income Statement & Profit Distribution

The other three parts of the assignment are:

Part A - the calculation of the net income for tax purpose of Second Chance;
Part B - the calculation of and the distribution of the net income of TelDrop; and
Part C - basically the calculation of the tax payable by the trustee of The Smiley Family Trust

Income Statement
For the year ended 30/06/2017
Particulars	Amount	Amount	Reason
Income
Cash Sales		$ 315,000.00	Ordinary income s 6-5 ITAA97
Opening Debtors balance	$ 10,000.00
Cash received from debtors	$ 38,000.00
closing debtors balance	$ 6,000.00
Credit sales		$ 34,000.00	Ordinary income s 6-5 ITAA97
Recovery of bad debt		$ 1,000.00	Taxation Ruling 92/18
Total Income		$ 350,000.00
Expenses
Cash Purchase		$ 80,000.00	S 8-1 of ITAA97
Opening creditors	$ 23,000.00
Payment to creditors	$ 138,000.00
Closing creditors balance	$ 25,000.00
Credit Purchase		$ 140,000.00	S 8-1 of ITAA97
Opening stock	$ 16,000.00
Closing Stock	$ (19,000.00)
Difference in stock balance		$ (3,000.00)
Council rates		$ 6,000.00	S 25-75 of ITAA 97
Legal expenses		$ 2,000.00	Division 25 of ITAA 97
Repairing expenses		$ 12,000.00	S 25-10 of ITAA 97
Wages		$ 80,000.00	S 8-1 of ITAA97
Wages (PAYG Instalments)		$ 41,500.00	S 8-1 of ITAA97
Superannuation		$ 7,600.00	S 86-75 ITAA 97
Advertising	$ 23,000.00
used from stock	$ 4,170.00
Total Advertising expenses		$ 27,170.00	S 8-1 of ITAA97
Motor vehicles expenses		$ 5,760.00	Division 28 of ITAA 97
other expenses		$ 10,000.00
Total Expenses		$ 409,030.00
Net Profit /(Loss) (Taxable Income)		$ (59,030.00)

Table 1: Income Statement

(Source: Created by Author)

Partnership Income Statement
For the Year ended 30/06/2017
Particulars	Amount	Reason
Income
Fees Received	$ 580,000.00	S 6-5 of ITAA 97
Total Income	$ 580,000.00
Expenses
Rent	$ 152,000.00	S 8-1 of ITAA97
Salary	$ 230,000.00	S 8-1 of ITAA97
Interest	$ 1,500.00	S 8-1 of ITAA97
Purchase	$ 23,000.00	S 8-1 of ITAA97
Total Expenses	$ 406,500.00
Net profit for distribution/ (Partnership Income)	$ 173,500.00

Table 2: Income Statement

(Source: Created by Author)

Statement showing distribution of profit
For the Year ended 30/06/2016
Particulars	Total	George	Toby
Partnership Income	$ 173,500.00	$ 86,750.00	$ 86,750.00
Interest on drawings	$ 1,480.00	$ 500.00	$ 980.00
Salary To partner	$ 143,000.00	$ 68,000.00	$ 75,000.00
Interest on capital	$ 2,000.00	$ 1,000.00	$ 1,000.00
Net profit	$ 29,980.00	$ 18,250.00	$ 11,730.00

Table 4: Distribution of profit

(Source: Created by Author)

List of No present entitlement
Particulars	Amount	Amount
Trust income		$ 68,000.00
George Smiley	$ 21,000.00
James Smiley	$ 17,000.00
Scott Smiley	$ 5,000.00
Jenifer Smiley	$ 5,000.00
Mathew Smiley	$ 3,000.00
Total Entitlement		$ 51,000.00
Remaining		$ 17,000.00
Less:
Scott Smiley	$ 5,000.00
Mathew Smiley	$ 1,500.00
James Smiley	$ 500.00
Total		$ 7,000.00
No present Entitlement		$ 10,000.00

Table 5: No present entitlement

(Source: created by Author)

If the trust have income and the beneficiaries allowed to demand their income then they are presently entitled.

Statement showing balance retained by trustee
Particulars	Amount	Amount	Reason
George Smiley
Present Entitlement		$ 21,000.00	He is a resident so section 97 applies. He is required to pay tax at normal rate.
James Smiley
Present Entitlement	$ 17,000.00		He is a resident so section 97 applies. He is required to pay tax at normal rate on $17500.
Speeding fines	$ 500.00
Total		$ 17,500.00
Scott Smiley
Present Entitlement	$ 5,000.00		He is 17-year-old minor. Therefore, legal disability under section 98 applies. Therefore tax will be paid at penalty rates
University fees	$ 5,000.00
Total		$ 10,000.00
Jeniffer Smiley
Present Entitlement		$ 5,000.00	She is 12-year-old minor. Therefore, legal disability under section 98 applies. Therefore tax will be paid at penalty rates
Mathew Smiley
Present Entitlement	$ 3,000.00		He is 1-year-old minor. Therefore, legal disability under section 98 applies. Therefore tax will be paid at penalty rates
Set aside for day care	$ 3,000.00
Total		$ 6,000.00

Table 6: balance

(Source: created by Author)

Statement showing the amount of tax payable
Particulars	Amount	Rate	Tax Payable	Reason
Remaining Net income	$ 10,000.00	47%	$ 4,700.00	Section 99A applies
Scott Smiley	$ 10,000.00	47%	$ 4,700.00	Section 98 applies
Jenifer Smiley	$ 5,000.00	47%	$ 2,350.00	Section 98 applies
Mathew Smiley	$ 6,000.00	47%	$ 2,820.00	Section 98 applies
Total	$ 31,000.00		$ 14,570.00

Table 7: Tax payable

(Source: Created by Author)

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