On 1 January 2013, Morris has started a sole trader business of on 31 December. His Profit and Loss Account for the year follows:

Sales

Less: Cost of Sales Gross Profit

Add: other Income

Interest received on Debenture 6,000

Interest from Individual Savings Account 1,000 Dividend income 9,000

Less: Expenses:

Depreciation 20,000 Wages and Salaries 15000 Interest Expense 6,000 Subscription 2,000 Donation 5,000 Bad and doubtful debt 3,000 Gift and Entertainment 4,500 Other Expense 2,500 Repairs and maintenance 8,500 Car Lease Rent 8,000 Car Expenses 6,800 Legal fees at the acquisition of land 500 NET PROFIT

printing-press preparing accounts ended 31 December 2019 is as

500,000 (200,000) 300,000

16,000 316,000

(81,800) 234,200

Notes:

1. The daughter of Morris is also working for the business. Morris gave a salary of 6,000 to her. For the same work, another staff receives a salary of 4,000

2. Few of his customers became bankrupt and Morris treated 1,600 as Bad and doubtful debt. Also, Bad and doubtful debts include 200 for Customer loan written off, 800 for suppliers loan written off, and 400 for former employee loan written off.

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3. The donation includes 200 for Local Charity, 4,000 for National Charity, 800 is for the Political party.

4. Subscription paid 900 for sports club membership of Morris and 300 for printers association and the remaining is for business purposes.

5. Interest expense includes 700, the interest on loan borrowed for the construction of the main Residence of Morris.

6. Repairs and maintenance include 5,000 for adding a room to store the papers, 1,500 for the purchase of a packing machine, 200 for painting the building. The remaining 1,800 is revenue expenditure for business purposes.

7. Other expenses include 200 staff parking fine during business hours, 100 parking fine of Morris during his official visit, 150 speeding fine for Morris, 500 for a penalty for not following the safety regulations and 50 is a wedding gift to staff, remaining 1,500 is for business purposes.

8. Gift and Entertainment: Morris arranged a staff party and spent 500 on that. Also, he arranged a party for customers for 800. He made so much gift to staff and customers which are listed below:

Gift of pen-drive (flash drive) costing 15 each for 10 staff and gift of chocolate box costing 10 each for 10 staff.

Gift of calendar costing 5 each for 500 customers and gift of a box of Red Bull costing 8 per box to 50 customers.

A gift to his daughter on her birthday 50

9. Car Expenses:

Morris had 3 cars:

Car 1 is used by Morris only for personal use. The expense of this car is 2,000.

Car 2 is used by Morris 30% for personal purposes. The expense of this car is 3,000. Car 3 is used by staff, 100% for personal purposes. The expense of this car is 1,800

10. Morris has taken a car on a rental basis for business for the annual rent of 8,000. The

CO2 emission of the car was 140 g/km.

11. The capital allowance of the business for the year-end 31 December 2019 is calculated

as 30,000.

12. The trading loss for the year ended 31 December 2018 was 50,000

Required to:

a) Calculate the adjusted trading Profit of the business of Morris for the year ended 31

December 2019. (5 marks)

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b) Explain how to adjust the business loss of Morris for the year ended 31 December 2018 and show the adjustment in the computation. (1 mark)

c) For the tax year 2019/20, Morris filed his Income-tax return on 30 September 2021. Calculate the penalty payable by him

4: 4G Group Assignment Taxation UG128 > Task 2: On 1 January 2013. Morris has started a sole trader business of printing-press preparing accounts on 31 December. His Profit and Loss Account for the year ended 31 December 2019 is as follows: Sales Less: Cost of Sales Gross Profit Add: other Income Interest received on Debenture 500,000 (200,000) 300,000 6,000 1.000 9,000 16,000 316,000 Interest from Individual Savings Account Dividend income Less: Expenses: Depreciation Wages and Salaries Interest Expense Subscription Donation Bad and doubtful debt Gift and Entertainment Other Expense Repairs and maintenance Car Lease Rent Car Expenses Legal fees at the acquisition of land NET PROFIT 20,000 15000 6,000 2.000 5,000 3,000 4,500 2,500 8,500 8,000 6,800 500 (81,800) 234,200 Notes: 1. The daughter of Morris is also working for the business. Morris gave a salary of 6,000 to her. For the same work, another staff receives a salary of 4.000 2. Few of his customers became bankrupt and Morris treated 1,600 as Bad and doubtful debt. Also, Bad and doubtful debts include 200 for Customer loan written off. 800 for supplier's loan written off, and 400 for former employee loan written off. 6 3. The donation includes 200 for Local Charity, 4,000 for National Charity, 800 is for the Political party 4. Subscription paid 900 for sports club membership of Morris and 300 for printer's association and the remaining is for business purposes. 5. Interest expense includes 700, the interest on loan borrowed for the construction of the main Residence of Morris. 6. Repairs and maintenance include 5,000 for adding a room to store the papers, 1,500 for the purchase of a packing machine, 200 for painting the building. The remaining 1,800 is revenue expenditure for business purposes. 7. Other expenses include 200 staff parking fine during business hours, 100 parking fine of Morris during his official visit, 150 speeding fine for Morris, E500 for a penalty for not following the safety regulations and 50 is a wedding gift to staff, remaining 1,500 is for business purposes 8. Gift and Entertainment: Morris arranged a staff party and spent 500 on that. Also, he arranged a party for customers for 800. He made so much gift to staff and customers which are listed below: Gift of pen-drive (flash drive) costing 15 each for 10 staff and gift of chocolate box 4: 4G Group Assignment Taxation UG128 the Political party. 4. Subscription paid 900 for sports club membership of Morris and 300 for printer's association and the remaining is for business purposes. 5. Interest expense includes 700, the interest on loan borrowed for the construction of the main Residence of Morris. 6. Repairs and maintenance include 5,000 for adding a room to store the papers, 1,500 for the purchase of a packing machine, 200 for painting the building. The remaining 1,800 is revenue expenditure for business purposes. 7. Other expenses include 200 staff parking fine during business hours, 100 parking fine of Morris during his official visit, 150 speeding fine for Morris, 500 for a penalty for not following the safety regulations and 50 is a wedding gift to staff, remaining 1,500 is for business purposes. 8. Gift and Entertainment: Morris arranged a staff party and spent 500 on that. Also, he arranged a party for customers for 800. He made so much gift to staff and customers which are listed below: Gift of pen-drive (flash drive) costing 15 each for 10 staff and gift of chocolate box costing 10 each for 10 staff. Gift of calendar costing 5 each for 500 customers and gift of a box of Red Bull costing 8 per box to 50 customers. A gift to his daughter on her birthday 50 9. Car Expenses: Morris had 3 cars: Car 1 is used by Morris only for personal use. The expense of this car is 2,000. Car 2 is used by Morris 30% for personal purposes. The expense of this car is 3,000. Car 3 is used by staff, 100% for personal purposes. The expense of this car is 1,800 10. Morris has taken a car on a rental basis for business for the annual rent of 8,000. The CO2 emission of the car was 140 g/km. 11. The capital allowance of the business for the year-end 31 December 2019 is calculated as 30,000. 12. The trading loss for the year ended 31 December 2018 was 50,000 Required to: a) Calculate the adjusted trading Profit of the business of Morris for the year ended 31 December 2019. (5 marks) 7 b) Explain how to adjust the business loss of Morris for the year ended 31 December 2018 and show the adjustment in the computation. (1 mark) c) For the tax year 2019/20, Morris filed his Income tax return on 30 September 2021. Calculate the penalty payable by him. (1 mark)