Sales $1225,000$

Other Income $24,300$

$229,300$

Cost of sales $347,000$

Gross profit $182,300$

Operating expenses

Office space rent $6,000$

Salaries and wages $18,000$

Office administration expenses $4$

Depreciation $55,000$

Total expenses $29,000$

Net profit $153,300$

Notes to the financial performance

$1.$ Included in sales is $$55,000$ which is still outstanding from Smart Eagles primary school which hired out the bus for its Easter Egg hunt trip in April $2023.$Beginning of $2024,$ DT management was informed that the school had failed to open its doors for the $2024$ academic year owing to mismanagement of funds. DT was listed as one of the many creditors of Smart Eagles and the liquidators have indicated DT will only be paid $40\%$ of the amount owing.

$2.$ The accountant did not include any profit on the disposal of any asset anywhere in the accounts.

$3.$ The cost of sales recorded only relates to fuel and wages for drivers and conductors.

$4.$ Included in administration expenses is an amount of $$500$ which was a fine paid by one of the buses at the South African border as a penalty for trying to smuggle passengers that did not have valid passports.

$5.$ The depreciation relates to the following fleet of buses owned by DT:

Description Acquisition date Cost$-$ Each $ Disposal

date Disposal

value $

$5$ x Yutong Buses $01-$Nov$-2012,000$ N$/$A N$/$A

$2$ x Scania Buses $01-$Jan$-2215,000$ N$/$A N$/$A

$1$ x Volvo Bus $05-$Jun$-2320,000$ N$/$A N$/$A

$1$ x Chicken Bus $1-$Jan$-204,0005-$Jun$-236,500$

DT has been unlucky in its quest to dominate the schools industry. In late $2022,$ Twinkle Stars, an ECD school which had been hiring out buses since Early $2021$ after the lifting of COVID restrictions was declared bankrupt. The school had been maintaining a credit account with DT which stood at $$40,000$ by $31$ December $2022.$ Luckily, one of the directors at Twinkle Stars served as a board member at DT thus an arrangement was made which resulted in Twinkle Stars transferring its land in Mabvazuva valued at $$40,000$ to DT in February $2023.$

Although it was an unexpected turn of events, DT saw this as an opportunity to expand its operations and make good use of the acquired land. They converted the property into a bus depot and parking facility, which helped streamline their operations and increase efficiency in managing their fleet of buses. DT opened up a section of the bus depot to Speed Link, an external bus company for parking services for a fixed fee of $$300$ per month. Speed Link had excess cash and decided to pay a lump sum amount for its parking services. Included in the amount paid for $2023$ of $$1,800,$ was $$600$ in relation to the $2024$ year of assessment.

DT management realised that there was an opportunity to make even more money at its bus depot through the provision of canteen services. During $2023,$ a canteen was opened which ran under the name Road Foods but was however not registered as a separate company from DT$.$ The canteen Chefs are allowed to take some for consumption any food leftovers edible. During the year the value of these leftovers taken by the chefs was $$5,600.$

Details of canteen stocks for $2023$

$$ $$6,000$ worth of stock was on hand at the end of $2023.$

$$ Food worth $$5,400$ was donated to the street kids in the Harare CBD$.$

$200$ litres of cooking worth $$350$ oil was distributed for personal consumption to the owners of DT$.$

Management of DT has decided that in $2024,$ Road Foods should be registered separately as a company. The board has also approved this decision.

$$ In all circumstances, the company chooses the tax provisions that give the most tax advantage.

$$ In all circumstances use tax rates applicable in the $2024$ year of assessment.

Using ONLY information under the $2023$ Financial performance and notes thereto, calculate the income tax payable by DT for its $2023$ year of assessment.

$($Start your calculation from the profit figure and indicate by way of Zero $(0)$ where there is no implication. Include narrations in your answer$)$

Communication skills $$ logical flow