Profits Tax Calculation Problem Avec Piano Limited, a manufacturing company, produced the following profit and loss account for the year ended 31 March 2002 Expenditure Salanes and wages 1199, 100 G ross pro 602,070 Directors fees 6,000 Superannuation fund contnbutions 16,800 Bad debt recovered 1,000 Insurance 4,040 Transfer from provision for bad debts 1,230 Freight charges 39,560 Profit on sale or lavestment 3.000 Legal and audit fees 19,900 Profit on currency exchange in respect of trade transactions Subscriptions and donations 3,020 Repairs 890 Traveling and entertainment 13.000 General sundries 2.090 Advertising 1.970 Printing and stationery 2341 Bank charges and interests 1989 Bad debts 11,000 Depreciation 49,540 Nel profit 220,570 TO 1615,500 Notes: 1. The company's superannuation (pension) fund is an approved one. 2. Repairs include the cost of work done on repairing the property of a director of the company, estimated at $1,200 3. A breakdown of the legal and audit fees as follow: Audit foe $2,000 Legal charges for debt collection $1,450 Customer agreements $380 Acquisition of patent rights $3,050 Registration of trademark $3.020 Tota! $9,900 4. Subscriptions and donations contain the following: Subscriptions to trade journals $1,090 Donation to Community Chest $1,130 Details of balance unknown 5800 Total $3,020 5. Traveling and entertainment include allowance and airfare to a director's wife in respect of a trip to Tokyo to attend a wedding reception (55,150) and airfare for another director to the United Kingdom to open a local sales office (56,000). 6. All the sundry expenses and advertising are allowable deductions 7. The depreciation allowance agreed by the IRD is $47,080. Calculate the profits tax payable by Avec Piano Limited for the year of assessment 2001/2002. Provide explanations to your adjustments. Profits Tax Calculation Problem Avec Piano Limited, a manufacturing company, produced the following profit and loss account for the year ended 31 March 2002 Expenditure Salanes and wages 1199, 100 G ross pro 602,070 Directors fees 6,000 Superannuation fund contnbutions 16,800 Bad debt recovered 1,000 Insurance 4,040 Transfer from provision for bad debts 1,230 Freight charges 39,560 Profit on sale or lavestment 3.000 Legal and audit fees 19,900 Profit on currency exchange in respect of trade transactions Subscriptions and donations 3,020 Repairs 890 Traveling and entertainment 13.000 General sundries 2.090 Advertising 1.970 Printing and stationery 2341 Bank charges and interests 1989 Bad debts 11,000 Depreciation 49,540 Nel profit 220,570 TO 1615,500 Notes: 1. The company's superannuation (pension) fund is an approved one. 2. Repairs include the cost of work done on repairing the property of a director of the company, estimated at $1,200 3. A breakdown of the legal and audit fees as follow: Audit foe $2,000 Legal charges for debt collection $1,450 Customer agreements $380 Acquisition of patent rights $3,050 Registration of trademark $3.020 Tota! $9,900 4. Subscriptions and donations contain the following: Subscriptions to trade journals $1,090 Donation to Community Chest $1,130 Details of balance unknown 5800 Total $3,020 5. Traveling and entertainment include allowance and airfare to a director's wife in respect of a trip to Tokyo to attend a wedding reception (55,150) and airfare for another director to the United Kingdom to open a local sales office (56,000). 6. All the sundry expenses and advertising are allowable deductions 7. The depreciation allowance agreed by the IRD is $47,080. Calculate the profits tax payable by Avec Piano Limited for the year of assessment 2001/2002. Provide explanations to your adjustments
