QUESTION TWO

Below is an extract of Profit and Loss Account of Senior Accountants Company Limited of London for the year ended 31st December, 2014. GH GH Gross Profit b/d 60,120.00 Profit on sale of asset 1,800.00 61,920.00 Expenses: Salaries and Wages 7,200.00 Directors' Fees 4,800.00 Repairs and Maintenance Vehicle 9,000.00 Legal Fees 1,800.00 Repairs and Maintenance Factory 11,760.00 Office Expenses 4,320.00 Bad Debts 2,400.00 Depreciation 4,800.00 Income tax 2,640.00 Business Promotion 1,920.00 Interest on Bank Overdraft 1,560.00 52,200.00 9,720.00 NOTES:

a) Repairs and Maintenance Vehicles GH This includes:

i. Cost of new engine 4,200.00 ii. Fuel and lubricants 3,000.00 iii. Tyres and tubes 1,800.00

b) Legal Fees: This relates to the cost of defending a driver of the company for careless driving. c) Repairs and Maintenance Factory This includes: i. Cost of new terrazzo floor 6,960.00

ii. New iron security gates 2,400.00

iii. Repairs of cracks in ceiling 1,200.00

iv. White washing and painting 1,200.00

d) Bad Debts The cashier of the company bolted with this amount. All efforts to trace him has so far proven futile.

e) Business Promotion This is in respect of advertisements and presents for good customers during Christmas.

f) Capital allowances claimable for the year is GH 3,840. Required: Determine the companys tax liability for the 2014 year of assessment.

QUESTION THREE

Below is the profit and loss account for Charles and Students Company Limited. The company deals mainly in sale of local and imported general goods. It has been in existence for the past 20 years. The statement below is for the year ended 31st March, 2014. GH GH Net Revenue 625,000.00 Cost of Sales (490,000.00) Gross Profit 135,000.00 Net Dividend 960.00 135,960.00 Expenses: Salaries and Wages 96,000.00 Rent 600.00 Telephone 1,800.00 Vehicle running expenses 3,500.00 Bank Charges 120.00 Depreciation 72.00 Bad Debts 1,080.00 Business Promotion 1,200.00 Donations 2,500.00 Travelling and Transport 4,400.00 Loss on Exchange 200.00 Repairs to Office Equipment 1,800.00 113,272.00 Net Profit 22,688.00 NOTES TO ACCOUNTS

1. Salaries include the following: GH a) Managing Director and Staff 88,000 b) Workers engaged in construction of Managing Directors private residence 8,000

2. Vehicle running expenses is for petrol, oil etc. and for maintenance of vehicles. During the year, the engine of one of the vehicles was replaced at a cost of GH 1,500. The old engine was discarded. The cost of the new engine has been included.

3. Bad Debt is made up as follows:

a) Specific debts 540 b) Provision for general doubtful debts 540

4. The company made a donation of GH 2,500 to the Heart Foundation, as a result of appeals the Heart Foundation made to the company for support.

5. Business Promotion: This is the cost of advertisements for the company.

6. Travelling and Transport is made up as follows:

a) Business trip undertaken Managing Director to Europe to arrange for supply and shipment of goods. The cost was GH 3,400. b) Transport and refreshment for friends and relatives who attended the funeral of the mother of the Managing Director in his hometown at Axim. This was GH 1,000.

7. Loss on Exchange: This was actual foreign exchange loss realized during transfer to suppliers abroad.

8. Repairs to Office Equipment is made up as follows:

a) Retainer fee 1,200 b) Cost of new computer 600

9. Capital allowance claimable is GH 550

10. Ignore capital allowance computation on new assets.