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QUESTION 5 Wharf and Alexander are father and son. Together they operate a business partnership providing security services. Wharf is aged 43. His...

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QUESTION 5 Wharf and Alexander are father and son. Together they operate a business partnership providing
security services. Wharf is aged 43. His son, Alexander aged 17, works full-lime in the partnership. Alexander left school at aged 16 to work full-time in the partnership they had set-up. During the 2015 financial year the partnership began business and made a loss of $10,000. This
loss was distributed equally between both partners. The partnership agreement states that all profits and losses will be shared after allowing for
wages to partners and interest on capital. During the 2015,11? income year the partnership had the following transactions: RECEIPTS
Gross Fees $ 510,000
Business Loan from Wharf 50,000
Gross Bank Interest 1,000
PAYMENTS
Interest on Overdraft ?,000
Interest on Loan from Wharf 5,000
Lease of all Security Systems Equipment owned by Wharf —— Note 1 50,000
Interest on Capital - Wharf 3,000
Wages to Employees 250,000
Wages to Wharf 40,000
Wages to Alexander 45,000
Superannuation paid for Employees 10,000
Other overheads (Deductible) 160,000 NOTE 1 Wharf owns all the security equipment and leases all lite equipment to the partnership. Wharf is entitled to
a deduction of $34,000 for decline in value of the equipment. NOTE 2
Neither partner has any losses brought fonrvard from prior years.

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