Question
Q. 6 Acul Ocolo Ltd's profit and loss account for the year of 30 June 2016 was as follows: Sales .............................................................................................1,430,000,000 Less cost of sales...........................................................................1,340,000,000
Q. 6
Acul Ocolo Ltd's profit and loss account for the year of 30 June 2016 was as follows:
Sales.............................................................................................1,430,000,000
Less cost of sales...........................................................................1,340,000,000
Gross Profit...................................................................................... 90,000,000
Other Income
Bad debt recovered (previously written off) .......... 2,000,000
Profit on sales of furniture ........................................200,000
92,200,000
Less: Operating expenses
Salaries and wages.................................................. 11,900,000
Staff meals (canteen equal terms)...............................3,100,000
Telephone ...................................................................3,000,000
Loss on sale of motor vehicle .....................................1,204,000
Electricity ....................................................................2,900,000
General expenses .........................................................1,800,000
Trading license ...............................................................500,000
Generator expenses .................................................... 1,100,000
Stationery ................................................................... 2,300,000
Director's remuneration ........................................... 20,000,000
Bad debts written off.................................................. 2,000,000
Rent and rates .............................................................3,200,000
Repairs and maintenance ........................................... 2,500,000
Subscriptions and donations .......................................1,000,000
Depreciation ............................................................... 6,000,000
Legal and accountancy fees ........................................1,400,000
Net Profit................................................................ 28,296,000
Notes
General expenses include the following:
Travelling expenses of staff (van) and directors .................1,000,000
Entertaining supplier ........................................................... 800,000
Repairs and maintenance
Redecorating existing premises ............................................500,000
Renovations of premises to remedy the Disrepair
by the previous occupant ....................................................2,000,000
Legal and accountancy charges
Debt collection services ........................................................200,000
Staff service agreements ......................................................250,000
45 year lease on new premises .............................................150,000
Audit and accountancy ...........................................................500,000
Consultancy director's wife project ........................................ 300,000
Total ..................................................................................... 1,400,000
Subscriptions and donations include:
Donation to political party ........................................................500,000
Subscription to UMA .............................................................. 300,000
Fees to trade fare ....................................................................200,000
Total .....................................................................................1,000,000
On 1 July 2015, the tax written down values of plant and machinery were as follows:
Class 1 .....................................................................................1,400,000
Class II ...................................................................................12,600,000
Class IV ..................................................................................48,000,500
The company purchased the following assets in the year:
Computer 1 August 2015..........................................................2,500,000
Furniture 1 December 2015 ...................................................10,400,000
Required
(i)Compute Acul Ocolo Ltd's chargeable income for the year ending 2016(10 mks)
(ii)Show all the workings and narrations where necessary (10 mks)
(Total 20 mks)
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