Kofi Tiemo T/A Danclay Merchants Total expenses - (377,500) NET PROFIT 102,000 The following additional information is available to you: i) Research and development: An amount of GHS 500 was spent on acquiring equipment for the purpose of the business. ii) Rent: This is in respect of building, part of which is used by Kofi as residence. It is assumed that the residential portion of the building covers 65% of the total cost of the rent. iii) Repairs and maintenance: An amount of GHS 3,000 was incurred in maintaining an asset which had a written down value of GHS 17,400 at the end of the year. iv) Entertainment: This was in respect of the expenses incurred during the wedding of Mr. DANCLAY MERCHANTS PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2021 GHS GHS Gross Profit b/d 479,500 LESS: Research and development 2,000 Rent 62,000 Staff salaries (Fresh graduate GHS 1,620) 38,000 Management salaries 52,000 Interest expense 17,000 Repairs and maintenance 4,000 Entertainment 8,000 Donations 31,000 Vehicle expenses 23,000 Travelling and transport 10,000 Legal fees 17,500 Bad debts 11,800 Depreciation 24,200 Advertisement 32,000 Medical expenses 28,000 Loss on sale of fixed assets 5,000 Training expenses 12,000 Page 9 of 11 Kofis grandson. v) Included in donations is an amount of GHS 13,000 given to the Kumasi festival organizing committee. vi) Legal fees: This was in respect of a suit against the enterprise for defaulting on tax payment. vii) Medical expenses: An amount of GHS 10,000 was spent on Kofis son when he was hospitalized. viii) Management salaries: This is made up as follows: Proprietor GH0 28,000 Chief Accountant GH0 15,000 Proprietors Son GH0 9,000 Given the qualification of the proprietors son, he would have earned GHS 8,000 on the open market. ix) Staff salaries: The total workforce of Mr. Kofi Tiemo is made up of twenty (20) employees out of which two (2) employees are fresh graduates from a tertiary institution. x) Advertisement: this is made up as follows: Permanent Neon Sign GHS 10,000 Newspaper advertisement GHS 14,000 Advertisement Tax GHS 8,000 xi) Bad Debt Specific debts written off GHS 2,200 General provision GHS 8,000 Specific provision GHS 1,600 xii) Training expenses: This is made up of the following: ICA (GH) Seminar attended by the Chief Accountant GHS 3,500 Astrological society of FRANCE dues paid by Kofi GHS 8,500 xiii) Interest expense: out of the total capital of GHS 860,000, GHS 720,000 was debt capital. xiv) Vehicle expenses: These are on the car used by Kofi. It is estimated that the vehicle is used evenly for business and private purposes. The travelling and transport expenses were in respect of Kofi medical treatment in London. xv) Capital Allowances: Assume capital allowance on all assets for the year was GHS 47,000. xvi) Closing stock of GHS 25,000 was obtained using LIFO basis. If FIFO had been applied, the figure would have been GHS 22,000. xvii) The good nature of Mr. Kofi business, he won the 2016 best business award. Apart from the prize attached to the award, he received the following gifts; 3 plot of land value at GHS 5,500 from the local Odikro Cash of GHS 3,200 from local customers, Toyota car value at GHS 4,500 from local suppliers Page 10 of 11

Required: You are required to Determine Kofis chargeable Income and Tax Liability for the 2021 year of Assessment. Ignore Kofi's personal reliefs.