Question
Health and Wealth Pte Ltd ( HW ) has been operating since the 1 5 January 2 0 2 3 . The company had a
The financial accounting statements of the company are set out below:
Balance Sheet of Health and Wealth Pte Ltd
As at December
Current Assets:
Cash at Bank
Accounts Receivable
Inventory
Total current assets
Fixed Assets:
Office Furniture at cost
Less accumulated depreciation
Office equipment at cost
Less accumulated depreciation
Factory equipment at cost
Less accumulated depreciation
Motor vehicles at cost
Less accumulated depreciation
Total Non current assets
Total Assets
LESS:
Current liabilities:
Trade creditors
NonCurrent Liabilities
Loan to Bank for Office equipment
Lease liability
Less amortised
Total Liabilities:
Net Assets:
Represented by:
Shareholder Funds
Ordinary Shares
Preference Shares
Accumulated earningslosses for year
Total
Total:
Profit and Loss Statement of Health and Wealth Pte Ltd
Revenue: $
Sales:
Interest
Proceeds on sale of Intellectual property
Insurance proceeds on disposal of truck
Total revenue:
Cost of sales:
Opening stock
Purchases
Closing stock at cost
Cost of sales
Gross profit
Expenditure:
Accounting fee for ongoing business
advice
Bank fees
Depreciation
Costs of approval from SFA
Establishment of company
Accounting fees for business plan
Legal fees re employee share plan
Lease payments on factory equipment
Interest on loan for office equipment
Reimbursement of petrol costs for
Josephine and Ali
Running costs of motor car for Filepe
Accommodation cost for Filepe
Provision of bad and doubtful debts
Donation to IPC
Contributions to CPF for staff
Wages for staff
Wages to Josephine
Wages to Ali
Wages to Filepe
Sundry operating expenses
Petty cash
Entertainment of suppliers
Total expenses
Net accounting profit
Note:
The company also gave $ of supplements to another IPC and the cost of the supplements used by Sarah was $
The company directors believe that the result is fantastic for the first year of operations and that the shareholders should get a dividend.
However the forward projections for are not as rosy and from the information prepared by KT it is likely that the company will make a loss from trading of approximately $
ISSUES THAT CLIENTS REQUIRE ADVICE ON:
Based on the financial information provided by the company directors can you please prepare a statement of the companys assessable income the amount of income tax payable.
In preparing the statement of assessable income please explain to Josephine, Ali and Filepe why you have made certain adjustments to the accounting profit.
Josephine, Ali and CSL ltd would like to receive a dividend and the directors have agreed to a payment of a dividend to the shareholders. It is agreed that Josephine will receive $ each and CSL Ltd will receive $
Is this the minimum the company can pay, can it pay out all of the profit as a dividend and as the adviser would you recommend this?
How is the dividend treated by the Josephine and Ali and CSL Ltd
Would it make any difference if the all the shareholders elected to reinvest their dividends for extra shares in the company?
If the company does make a loss in the basis period of $ how will it be treated by the company for taxation purposes? If cash flow is an issue do you think that the activity undertaken by the company would qualify for any Government incentives?
Step by Step Solution
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Step: 1
To prepare a statement of the companys assessable income and the amount of income tax payable we need to calculate the assessable income by making adjustments to the accounting profit The adjustments ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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