Question
K. Kinyenje Co. Ltd is a manufacturing cum wholesale business. The accountant of the company has provided you with the following profit and loss account
K. Kinyenje Co. Ltd is a manufacturing cum wholesale business. The accountant of the company has provided you with the following profit and loss account for the year of income 2015.
Sh. | Sh. | ||
Opening stock Purchases Depreciation Directors remuneration Salaries and wages General expenses Auditor's fees Reserves Bad debts reserve Taxes Interest on loan Manufacturing expenses Supplies used Commissions paid Provision for dividends Audit fees - for tax appeal Preliminary expenses Fire insurance Rental loss Net profit | 1,048,000 14,076,000 2,052,000 543,000 756,000 255,000 210,000 2,250,000 888,000 129,000 1,038,000 7,689,000 1,338,000 270,000 900,000 100,000 700,000 122,000 10,000 541,000 34,915,000 | Sales Closing stock Profit on sale of shares ex-dividend Bad debts recovered (specific) | 31,752,000 2,283,000 760,000 120,000
________ 34,915,000 |
Additional information provided is as follows:
1. Stock of goods both at the beginning and at the end of the year were overstated by 20%.
2. Rental loss analysis:
Sh. | Sh. | |
Gross rent Less: Sweepers wages Extension (servants quarter) Painting Mortgage interest Land rates and rent Stone wall fencing Loss |
60,000 400,000 80,000 170,000 20,000 100,000 | 820,000
830,000 (10,000) |
3. Preliminary expenses relate to company formation.
4. Bad debts (specific) are Sh.540,000.
5. Taxes represent VAT paid
6. General expenses include Sh.45,000 for donations and Sh.30,000 contributions to a trade union.
7. The company owned the following fixed assets purchased during the years indicated:
Year | Cost Sh. | |
Machinery (old) fixed in old building Computers Furniture and fittings New machinery fixed in building Factory building Extension to factory building (Brought to use on 1 August 2015) | 2014 2015 2014 2015 2014
2015 | 14,400,000 3,000,000 1,920,000 18,000,000 12,000,000
6,000,000 |
Required:
(a) The adjusted income/loss for K. Kinyenje Co. Ltd. for the year of income 2015.
(b) The tax payable (if any), indicating when it is due.
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