Charles Whyte commenced business on May 1 2019, making up his accounts to September 30 annually....
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Charles Whyte commenced business on May 1 2019, making up his accounts to September 30 annually. The statement of the Profit or Loss Account for the first 17 months ended September 30,2020 is as follows: Gross Profit Less: Repairs and maintenance Local transport and travelling Salaries and wages Provision for bad debts Preliminary expenses Depreciation Bank interest and charges Legal and professional charges General expenses (Allowable) Clearing expense on motor vehicle Bad debt £'000 1,500 2,450 6,500 1,350 960 1,630 1,520 1,380 1,870 685 2,800 £'000 19,300 22,645 (3,345) (0) Bad debt Amounts written off Loan to absconded employee (ii) (iii) (iv) You are also given the following additional information. £ (v) The following qualifying capital expenditures were acquired on: 30/10/2018 1/1/2019 1/5/2019 Building Motor Vehicle Furniture and fittings Legal and professional charges were: Fines for contravention of the law Legal expenses for tax appeal Audit and accountancy charges Salaries and wages: 1,850.000 950.000 Senior staff Junior staff 3 Charles Whyte's Children in higher institution £ 5,500,000 3,800,000 1,900,000 Provision for bad debts was calculated as 5% of balance of trade debtors as at September 30, 2020. £ 350,000 185,000 845,000 1,380,000 £ 3,500,000 2,400,000 600,000 6,500,000 a. Identify FIVE deduction not allowable for the purpose of ascertaining the income of an individual for tax purposes. (5 Marks) b. Compute the Adjusted Profit of Charles Whyte for the period ended. September 30,2020 (10Marks) Charles Whyte commenced business on May 1 2019, making up his accounts to September 30 annually. The statement of the Profit or Loss Account for the first 17 months ended September 30,2020 is as follows: Gross Profit Less: Repairs and maintenance Local transport and travelling Salaries and wages Provision for bad debts Preliminary expenses Depreciation Bank interest and charges Legal and professional charges General expenses (Allowable) Clearing expense on motor vehicle Bad debt £'000 1,500 2,450 6,500 1,350 960 1,630 1,520 1,380 1,870 685 2,800 £'000 19,300 22,645 (3,345) (0) Bad debt Amounts written off Loan to absconded employee (ii) (iii) (iv) You are also given the following additional information. £ (v) The following qualifying capital expenditures were acquired on: 30/10/2018 1/1/2019 1/5/2019 Building Motor Vehicle Furniture and fittings Legal and professional charges were: Fines for contravention of the law Legal expenses for tax appeal Audit and accountancy charges Salaries and wages: 1,850.000 950.000 Senior staff Junior staff 3 Charles Whyte's Children in higher institution £ 5,500,000 3,800,000 1,900,000 Provision for bad debts was calculated as 5% of balance of trade debtors as at September 30, 2020. £ 350,000 185,000 845,000 1,380,000 £ 3,500,000 2,400,000 600,000 6,500,000 a. Identify FIVE deduction not allowable for the purpose of ascertaining the income of an individual for tax purposes. (5 Marks) b. Compute the Adjusted Profit of Charles Whyte for the period ended. September 30,2020 (10Marks)
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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