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Ndlovu Jam Ltd is a company specializing in the manufacturing of various types of jams and sauces. The following is an extract of Ndlovu Jam
Ndlovu Jam Ltd is a company specializing in the manufacturing of various types of jams and sauces.
The following is an extract of Ndlovu Jam Ltds trial balance for the year ended December : Notes Debit
R Credit
R
Administration building cost
Delivery vehicles cost
Administration building accumulated depreciation
Delivery vehicles accumulated depreciation
Trade receivables
Profit before tax
Additional information
Property, plant and equipment Administration building
Ndlovu Jam Ltd acquired an administration building at a cost of R on January On this date the administration building was available for use as intended by management. The administration building has a residual value of Rnil and is depreciated over years according to the straightline method. The SA Revenue Service does not allow a capital allowance on the administration building. Delivery vehicles On January Ndlovu Jam Ltd purchased a new delivery vehicle for R The delivery vehicle was available for use, as intended by management, and brought into use on this date. Ndlovu Jam Ltd sold a delivery vehicle for R at year end on December The delivery vehicle was originally acquired on January at a cost price of R The delivery vehicle was available for use, as intended by management, and brought into use on this date. On the date the delivery vehicle was sold, the accumulated depreciation amounted to R Only the following journal entry was recorded for the sale of the delivery vehicle in the accounting records of Ndlovu Jam Ltd for the year ended December : Bank SFP dr Sale of delivery vehicle PL cr Recording of sale of delivery vehicle.
The delivery vehicles are depreciated according to the straightline method over five years with no residual value.
The SA Revenue Service allows a capital allowance over four years not prorata on the delivery vehicles.
No other delivery vehicles were acquired or sold during the year.
Trade receivables are as follows:
Trade receivables
Allowance for credit losses
The SA Revenue Service allows of the allowance for credit losses as a deduction. Actual credit losses incurred are written off directly to the statement of profit or loss and other comprehensive income and not against the allowance for credit losses.
Profit before tax
Included in profit before tax are
Foreign income received from China. The foreign income is not
taxable in South Africa in terms of a double taxation agreement
Ndlovu Jam Ltd paid foreign taxes of R on this income.
Allowance for credit losses refer
Sale of delivery vehicle refer
Donation not tax deductible
Depreciation administration building
Depreciation delivery vehicles
Insurance premium paid for the year November to
October
Taxation The company provides for deferred tax on all temporary differences according to the statement of financial position approach. There are no exempt or temporary differences except those mentioned in the question. There is certainty beyond any reasonable doubt that the company will have sufficient taxable profit in future against which any deductible temporary differences can be utilised. The deferred tax liability balance was R on December which you may assume to be correct. The SA Normal tax rate changed from in to in The capital gains tax inclusion rate is Ignore the implications of Value Added Tax VAT The following is an extract of the statement of financial position SA Revenue Service current tax general ledger account of Ndlovu Jam Ltd for the year ended December :
SA Revenue Service current tax
Bank st provisional tax payment for The accountant of Ndlovu Jam Ltd has not y
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