Question 1 Zara Rose commenced a florist shop business on 1 January 2016. The income statement in respect of the business for the period from 1 January 2020 to 31 December 2020 is as follows: RM RM Notes Income Sales in Cash & Credit Dividend Insurance recovery for loss of inventory Profit on sale of fixed assets 190,000 1,200 70,000 3,100 264,300 Less: Expenses Cost of products Salary Leave passage Bad and doubtful debts Entertainment Repairs Insurance premium Fines Sundry expenses Purchase of a furniture and fittings 37,200 1 81,200 29,000 3 1,430 4 16,000 5 12,700 6 2.400 7 1,030 8 25,060 23,150 (209,170) 55,130 Net profit Notes: Notes: 1. Salary includes RM40,000 for RM41,200 for staff. proprietor and 2. Leave passage includes cost incurred for proprietor (RM3,000) and staff (RM6,000). 3. Bad and doubtful debts charged to income statement by Zara amounted to RM600 and RM830, respectively. 4. Entertainment expenses are incurred for holding a Family Day for the staffs and entertainment of flower suppliers, amounted to RM13,000 and RM3,000, respectively. 5. Repairs include RM550 for the cost of essential repairs to newly acquired equipment which could not be used until repairs had been carried out. It also includes the cost of RM12,150 incurred constructing a new and improved display cabinets for the shop. The cost of repairing the old cabinets would have been higher. 6. Insurance premium in respect of insurance policies against fire and loss of profits by the business. 7. Fines imposed on the business for repeated offences of over speeding by delivery staff. Such practice is necessary to increase the profitability of the business. 8. Sundry expenses are as follows: Depreciation Promotional giftsfase with business logo) 2385 Shop rental 16 500 Motor vehicle expenses 5.712 Based on the information given you are required to compute the amount of adjusted business income of Ms Zara Rose under Section 4(a) of ITA 1967 for the year of assessment 2020, starting with the net profit of the business. Question 2 Mrs Teng, the sole proprietor of a food catering business, submits her profit and loss account for the year ended 31 December 2020 as follows: Notes RM RM 199.000 Sales lis Cost of sales T Remunerations Van running expenses Leave pasage Donations (approved 56840 2174.700 3 17,200 4 300 150.000 39.000 Net profit Notes: (1) Cost of sales includes the cost of meals consumed by Mrs Teng and her family amounting to RM10,800. The catering price of these meals would be RM13,000. (2) Remuneration includes a sum of RM50,400 in respect of the salary paid to Mrs Teng. (3) The van, which was leased by Mrs Teng, is used partly for private purposes. The Inland Revenue Board has accepted that one quarter of the van running expenses are attributable to these private purposes. (4) The leave passage cost relates to a trip made by Mrs Teng and her children to visit her parents in Sabah. Starting with the net profit of the food catering business, compute the chargeable income of Mrs Teng for the year of assessment 2020. Question 1 Zara Rose commenced a florist shop business on 1 January 2016. The income statement in respect of the business for the period from 1 January 2020 to 31 December 2020 is as follows: RM RM Notes Income Sales in Cash & Credit Dividend Insurance recovery for loss of inventory Profit on sale of fixed assets 190,000 1,200 70,000 3,100 264,300 Less: Expenses Cost of products Salary Leave passage Bad and doubtful debts Entertainment Repairs Insurance premium Fines Sundry expenses Purchase of a furniture and fittings 37,200 1 81,200 29,000 3 1,430 4 16,000 5 12,700 6 2.400 7 1,030 8 25,060 23,150 (209,170) 55,130 Net profit Notes: Notes: 1. Salary includes RM40,000 for RM41,200 for staff. proprietor and 2. Leave passage includes cost incurred for proprietor (RM3,000) and staff (RM6,000). 3. Bad and doubtful debts charged to income statement by Zara amounted to RM600 and RM830, respectively. 4. Entertainment expenses are incurred for holding a Family Day for the staffs and entertainment of flower suppliers, amounted to RM13,000 and RM3,000, respectively. 5. Repairs include RM550 for the cost of essential repairs to newly acquired equipment which could not be used until repairs had been carried out. It also includes the cost of RM12,150 incurred constructing a new and improved display cabinets for the shop. The cost of repairing the old cabinets would have been higher. 6. Insurance premium in respect of insurance policies against fire and loss of profits by the business. 7. Fines imposed on the business for repeated offences of over speeding by delivery staff. Such practice is necessary to increase the profitability of the business. 8. Sundry expenses are as follows: Depreciation Promotional giftsfase with business logo) 2385 Shop rental 16 500 Motor vehicle expenses 5.712 Based on the information given you are required to compute the amount of adjusted business income of Ms Zara Rose under Section 4(a) of ITA 1967 for the year of assessment 2020, starting with the net profit of the business. Question 2 Mrs Teng, the sole proprietor of a food catering business, submits her profit and loss account for the year ended 31 December 2020 as follows: Notes RM RM 199.000 Sales lis Cost of sales T Remunerations Van running expenses Leave pasage Donations (approved 56840 2174.700 3 17,200 4 300 150.000 39.000 Net profit Notes: (1) Cost of sales includes the cost of meals consumed by Mrs Teng and her family amounting to RM10,800. The catering price of these meals would be RM13,000. (2) Remuneration includes a sum of RM50,400 in respect of the salary paid to Mrs Teng. (3) The van, which was leased by Mrs Teng, is used partly for private purposes. The Inland Revenue Board has accepted that one quarter of the van running expenses are attributable to these private purposes. (4) The leave passage cost relates to a trip made by Mrs Teng and her children to visit her parents in Sabah. Starting with the net profit of the food catering business, compute the chargeable income of Mrs Teng for the year of assessment 2020