Question
Big bang Pty (Ltd) is a company which is involved in sale of manufacturing goods. The company had the following income and expenses for the
Big bang Pty (Ltd) is a company which is involved in sale of manufacturing goods. The company had the following income and expenses for the year of assessment: R15 000 for the collection of debts from debtors that had gone bad. R25 000 in a case for suing an employee for a loan that he refused to pay R26 000 for legal costs incurred due to a customer suing the company for supplying a product that was of bad quality Trade debtors = 44 000 Loan given to employee = 20 000 The following bad debts were written off during the previous year of assessment and were recouped during the year of assessment ended 31 January 2021 Trade debtors = 124 000 Purchases of trading stock of R3 500 000 were acquired during the year of assessment and the opening stock and closing stock was R2 500 000 and R1 830 000 respectively. 1. The companys income comprised of sales of R5 250 000, dividends of R2 100 000 and interest income of R346 000 2 Legal expenses were incurred during the year of assessment and was as follows: . The customer had won the legal battle against the company and they were ordered to pay him a settlement amount of R60 000 3. 4. A heavy hail storm had caused damages to the building which amounted to R 24 000 The company entered into a restraint of trade agreement with a manager that resigned from employment, the agreement prevents the employee from starting a business of a similar nature for the next 4 years. The amount paid to the manager was R120 000 during the year of assessment. 5. 6 The following bad debts were written off during the year of assessment: . The accounting provision (according to list) for doubtful debts amounted to R210 000 on for the previous year of assessment and R350 000 for the current year of assessment. 7. During the year of assessment, the company granted 10 000 shares to each and every one of its 40 permanent employees at a consideration of R0,60 a share. These shares have a nominal value of R1 each. Their market value was R7 a share on the date that the grants were approved. No restrictions apply to these shares. The plan in terms of which the shares were issued by the company qualifies as a broad-based employee share plan in terms of section 8B. 8. 9 Trading stock: . 10 The company had an assessed loss of R 440 000 from the 2020 year of assessment .11 The following donations were made during the current year of assessment: Non-public benefit organisation = R220 000 Public benefit organisation = R265 000 YOU ARE REQUIRED TO calculate the normal tax liability of Big Bang Pty (Ltd) for the 2021 year of assessment.
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