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The following income statement was prepared for Mahal, Min, Murphy amp; Associates ("3M Consulting"), a partnership comprised of four partners who...
The following income statement was prepared for Mahal, Min, Murphy & Associates ("3M Consulting"),
a partnership comprised of four partners who share income equally.
Mahal, Min, Murphy & Associates
INCOME STATEMENT
for the year ended December 31, 2017
Gross revenue ....................................................... $994,250
Less:
Professional staff employee
salaries ............................................
$229,000
Office salaries ................................. 74,000
Rent ................................................. 42.000
Office supplies ................................ 17,000
Client entertainment ...................... 5,075
Capital cost allowance .................... 16,222
Donations to charities .................... 250,000
633,297
$360,953
Gain on sale of securities of public
companies .......................................
$100,000
Dividend income:
Dividends received from taxable
Canadian corporations ................... 25,000
Capital dividends ............................ 5,000
Net income for accounting purposes ...
130,000
$490,953
The adjusted cost base to Ms. Mahal of her partnership interest was $45,792 at the beginning of the
year. Her drawings for the year were $77,500.
The dividends were received from a CCPC, all of whose income was eligible for the small business
deduction.
REQUIRED
A. Compute the partnership income for the year, the income to be allocated to Ms. Mahal and the
nature of the income.
B. Compute the adjusted cost base to Ms. Mahal of his partnership interest as at December 31st,
2017 and as at January 1st, 2018.
