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 Fully franked dividends from Investopedia Ltd 396,000
28,000
Proceeds from sale of shares in Lamb Supreme Ltd. 7,000
Payments Trading stock and overheads 84,000
Salary paid to Wiley Salary to Anita Coyote.* 75,000
45,000
Rent paid to Wiley 55,000
(includes $30,000 paid on 30 June 2016 for 12 months in advance)
Interest paid to Ralph on ban Interest on capital paid to Wiley 17,000
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
T. commissioner 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 Wileys tax return..