Mr Mukombe, a farmer, owns a piece of land in Mumbwa District of Central province which he uses for farming businesses. For the year ended 31 December 2020. Mukombe prepared the following statement of profit or (loss): K K Gross profit 1,080,000 Other income (Note 1) 260,000 1,340,700 Less operating expenses: Depreciation 70,250 Accountancy fees 8,700 Wages and Salaries (Note 2) 205,880 Repairs & Renewals (Note 3) 40,500 Legal expenses (Note 4) 25,700 Bad debts (Note 5) 37,220 Rent & Rates (Note 6) 148,600 Entertainment expenses (Note 7) 101,000 General expenses (Note 8) 257,400 (895,250) Net profit for the year 445,450 The following additional information is relevant: Note 1: Other Income Included in other income are, dividends K45,000, royalties K80,000, rental income, k100,000, and bank interest received k35,000. All the amount of investment income are gross amounts. Withholding tax has already been paid. Note 2: Wages & Salaries 3 3 This figure includes wages & salaries for farm employees k115,680 and Mukombes salary K90,200. Note 3: Repairs & Renewals This figure includes; construction of wall fence on the farm K26,450 and repairs to farm implements K14,050. Note 4: Legal Expenses This figure includes the following: K Defending title to farm produce 20,200 Recovery of loan to former employees 5,500 (expenses) 25,700 Note 5: Bad debts Bad debts include the following: K Trade debts written off 18,800 Loan to former employee written off 26,500 Employee loan recovered (12,500) Increase in specific provision 4,500 37,220 Note 6: Rent and Rates This figure consist of rent and rates of farming premises K102,600, and rent paid for Mukombes residence was K46,200. Note 7: Entertainment expenses This figure includes the following: K Entertaining customers and suppliers 76,000 Labour day awards for employees 14,700 4 4 Christmas party for employees 10,300 101,000 Note 8: General expenses This figure includes the following: K Staff training costs in farming 16,180 Penalty for late payment of provisional income tax 15,340 Other allowable expenses 225,880 257,400 Note 9: Goods taken from stock Mukombe took farm produce from stock with a cost of K15,700. Mukombe charges a mark-up of 20% on all sales. No adjustment has been made in the financial statements in respect of the transaction. Note 10 Provisional income tax Mukombe paid provisional income tax for the charge year 2020 of K6,900. Note 11: Non-current Assets The Income tax values of Implements, Plant and Machinery at 1 January 2020 were as follows: ITV Original cost (K) Farm tractors 210,000 420,000 Farm ploughs 75,000 150,000 Motor car 56,000 140,000 It has been agreed with the Commissioner General that Mukombe has private use in the car of 25%. Other expenditure incurred, in addition to the wall fence (see Note 3 above), during the year 2020 was as follows: K Dwelling houses (2 units) 44,000 Farm barn 15,000 5 5 Boreholes 33,700 REQUIRED: (a) Calculate the maximum capital allowances claimable by Mukombe for the charge year 2020. (b) Calculate Mukombes taxable farming profits for the charge year 2020. (c) Compute the Income tax payable by Mukombe for the charge year 2020.