Adel: statement of profit or loss for the year to 30 April 2019

Gross Profit

342,000

Other Income

Impairment trade losses recovered (previously written off)

950

Profit on sale of office

6,800

Building society interest

5,300

13,050

Expenses

Depreciation

17,000

General expenses

74,000

Impairment losses (trade)

850

Legal and accountancy charges

1,720

Rent and rates

2,100

Repairs and renewals

27,600

Salaries and wages

53,200

Subscriptions and donations

7,380

Travel

11,100

(194,950)

Net Profit

160,100

Notes

(1)

General expenses include the following

Entertainment: staff

1,500

Entertainment: Suppliers

900

(2)

Repairs and renewals include the following

Redecorating existing premises

650

Renovations to new premises to remedy wear and tear of previous owner (the premises were usable before these renovations)

850

(3)

Legal and accountancy charges are made up as follows:

Debt collection service

350

staff service agreements

130

Tax consultant's fees for advice on tax efficient personal investments

100

60-year lease renewal

150

Audit and Accountancy

800

1,530

(4)

Subscriptions and donations include the following

Donations under the gift aid scheme

5,500

Donations to a political party

600

Sports facilities for staff

400

Subscription to trade associations

250

(5)

Travel expenses include Adel's motoring expenses of 3,000. 30% of his use of his car was for private purposes.

(6)

Capital allowances amounted to:

22,000

Required:

a) Compute Adels taxable trading profit for the accounting period to 30 April 2019. Start with the net profit figure given and you should indicate using zero (0) any items which do not require adjustment. (4 Marks)

b) If Adel does not have any other income in 2019/20, compute Adels Income Tax Liability. (1 Mark)