Woody and Buzz (Toy Store)
Woody and Buzz have a partnership and are equal partners running a business known as The Toy Store. It’s a party venue business that provides children’s parties and corporate events. It provides a complete service including arranging the food, decorations, entertainment, and party goods. It also hired out some of its equipment when it was not being used in its own business to movie sets. The accounts of Woody and Buzz for the year ended 30 June 2020 are as follows:
Receipts ($)
-Cash banked in respect of parties planned and hosted 321,000
-This included $11,250 which was from parties completed last financial year. Functions which were completed in the current year but not yet paid total $7,800.
-Hire of equipment 32,400
-Interest on drawings ($340 for Woody and $170 for Buzz) 510
-Interest received 1,350
Expenditure
-Purchases 63,240
-Staff salaries (this amount included $19,000 paid to Woody’s cousin, Jessie, who works part-time and was paid $4,000 more than a non-related employee who works the same hours doing a similar job) 92,000
-Staff superannuation 8,280
-Provision for annual leave 7,080
-Salaries for Woody and Buzz ($60,000 for Woody and $40,000 for Buzz) 100,000
-Superannuation for Woody and Buzz ($5,400 for Woody and $3,600 for Buzz) 9,000
-Interest on capital ($790 for Woody and $540 for Buzz) 1,330
-Repair of a space bouncy castle 890
-Purchase of a star machine 640
-Legal fees 2,500
Additional information
-The legal fees arose as a result of Woody and Buzz consulting their lawyers and accountants to advise them if in future they should change their structure to a company.
-Annual leave actually paid during the year was $3,400.
-$1,020 of the superannuation for staff remained unpaid at 30 June 2020.
Required:
Calculate the net income of the partnership assuming they do not want to use Small Business Entity (SBE) elections.
