Caribbean Holding Ltd is a manufacturer of cricket balls, bats and all other cricket gear. The companys summarized profit and loss account for the year ended 31 December 2010 is as follows:

$ $

Gross Profit 380,000

Operating expenses

Depreciation 53 800

Gifts and donations (note 1) 8 000

Professional fees (note 2) 9,000

Repairs and renewals (note 3) 35 000

Other expenses (note 4) 45 000

Loss on disposal of vehicle (note 5) 8,000

Bad debt expenses (note 6) 16 000

Miscellaneous expenses (note 7) 46 000

------------ 220 800

Operating Profit 159 200

Interest Payable (note 8) 31 000

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Profit before taxation 128 200

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Notes to accounts

Note 1 Gift and donations

Gifts to customers (pens costing $ 15 each displaying

Caribbean Holding name) 3 000

Donation to a political party 2 500

Donation to an anonymous person 1 500

Donation to a local registered charity 1 000

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8 000

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Note 2- Professions Fees

Accountancy and Audit fee 2 500

Legal fees in connection with the issue of share capital 3 000

The cost of registering the companys trademark 500

Debt collection 1 000

Legal fees in connection with the defence of the companys

Human Resources manager in a harassment law suit 2 000

---------- 9,000

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Note 3 Repairs and renewals

The figure of $ 35 000 for repairs and renewals includes $ 8 000 for replacing the floor of a warehouse, which was in a bad state of repair, $ 17, 000 for initials repairs to an office building acquired on 24^th March 2008. The office building was not habitable until the repairs were carried out; this fact was reflected in the purchase price. An extension to an existing warehouse was also included at a cost of $ 10 000.00.

Note 4 Other Expenses

The figure of $ 45 ,000 for other expense includes $ 6000 for entertaining customers, $ 5 000 for entertaining employees. A fine of $ 9000 for publishing a misleading advertisement and $ 8, 000 for entertaining guest at a birthday party for the Managing Directors daughter; the travel expenses of $ 5,000 for the managing director and his family going to adventure Land for vacation. The remaining expenses are all fully allowable.

Note 5 Disposal of vehicle

The vehicle had a purchase price of $ 60 000.00; at the date of sale the capital allowances for the period were $ 48,000. The proceeds for the vehicle amounted to $ 25,000. The cost to deliver the vehicle to the place of sale was $1,000.00.

Note 6 - Bad debts

Trade debts written off 3,500

Increase in specific bad debt provision 5,200

Increase in general provision for doubtful debts 4 800

Reserve created for probable loss of fixed assets 2,500

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16,000

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Note 7 Miscellaneous Expenses

Fine for speeding incurred by the companys messenger during

Working hours 3,000

Cost of a delivery Truck 35,000

Fine in respect of late filing of corporation tax 5 000

Defalcation by managing director 3,000

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46,000

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Note 8 Interest payable

The interest payable figure includes $ 25,000 in respect of a 6% debenture loan used for trading purposes, the remaining amount relates to interest paid on behalf of a director on a loan for personal use $6,000.

Note 9 Capital Allowance

On 1 January 2010, the written down values of fixed assets were as follows:

Isukzu truck (original cost - $ 48,500) $ 25 000

Plant and Machinery (Original cost - $ 16,500) $ 9 500

Computer (original cost - $ 5,500) $ 3,500

During the year ended 31 December 2010, the following occurred;

Purchase a Nissan Sentra for $ 30,500

Note 10 Other information

Caribbean Holding Ltd had unrelieved tax losses brought forward of $20,500 as at the previous financial year. The company had prepaid corporation taxes of $ 10,500 for tax year 2010.

Required

a. Calculate Caribbean Holding Ltd tax adjusted profit, after capital allowances, for the year ended December 2010.

b. Calculate the final tax liability.