Case Stimulus
Fadeke, Femi, Kola and Gbenga have been in partnership as medical practitioners for eight years. The statement of profit or loss for the year ended December 31, 2021 is as follows:
N N
Gross income 224,500,000
Direct expenses (48,700,000)
Gross profit 175,800,000
Deduct:
Salaries and wages 72,000,000
Rent and rates 1,500,000
Transport and travelling 825,000
Telephone and telex 210,000
Motor running expenses 680,000
Allowance for doubtful debts 310,000
Miscellaneous expenses 1,450,000
Other professional charges 360,000
Audit fees 500,000
Bank charges and commission 1,122,500
Depreciation 1,240,600
Interest on loan:
Fadeke 300,000
Femi 240,000
Kola 180,000
Gbenga 150,000
Interest on capital:
Fadeke 1,250,000
Femi 1,250,000
Kola 1,250,000
Gbenga 1,250,000
Passage and leave allowance:
Fadeke 660,000
Femi 660,000
Kola 660,000
Gbenga 660,000 88,708,100
Net profit for the year 87,091,900
Additional information:
(i) Included in salaries and wages is N1,200,000 paid for each of the partners.
(ii) Rent and rates comprise:
N
Rent paid to partner – Fadeke 1,440,000
Rates 60,000
1,500,000
(iii) Miscellaneous expenses:
These include:
Donation to a church in the hometown of Fadeke 50,000
Allowance paid to the domestic staff of Femi 240,000
Cost of repairs and maintenance of the residence of
each partner totaling
840,000
Office repairs 320,000
1,450,000
(iv) Captial allowances agreed with the revenue was N980,000
(v) Profits are to be shared equally amongst the partners
(vi) Fadeke and Femi are married with three and two children, respectively
(vii) Fadeke has a life assurance policy of N960,000 on which she pays N96,000 annually as premium
(viii) Fadeke maintains her aged father who is over 68 years