Question
Shisham Limited is a company which trades as a manufacturer of juices. The companys statement of profit or loss for the year ended 31 March
Shisham Limited is a company which trades as a manufacturer of juices. The companys statement of profit or loss for the year ended 31 March 2021 is as follows:
| ||
Gross profit |
| 432,000 |
Other income |
|
|
Profit on disposal of office building (note 1) |
| 45,000 |
Bank interest (note 2) |
| 6,800 |
Expenses |
|
|
Depreciation | 48,740 |
|
Professional fees (note 3) | 21,870 |
|
Repairs and renewals (note 4) | 28,990 |
|
Other expenses (note 5) | 24,300 |
|
|
| -123,900 |
Finance costs |
|
|
Interest payable (note 6) |
| -24,740 |
Profit before taxation |
| 335,160 |
Notes
- Disposal of office building
The profit of 45,000 is in respect of a freehold office building that was sold on 30 June 2020 for 380,000. The chargeable gain on sale has been computed to be 45,500.
- Bank interest received
The bank interest was received on 31 March 2021 and is the amount accrued to that date. The bank deposit is held for non-trading purposes.
- Professional fees
Professional fees are as follows:
Accountancy and audit fee 5,870
Legal fees in connection with the issue of share capital 8,700
Legal fees in connection with the issue of loan notes (N.6) 6,400
Legal fees in connection with fine for breach of health
And safety legislation 900
21,870
- Repairs and Renewals
The figure of 28,990 for repairs includes 9,800 for constructing an extension to the companys manufacturing premises and 5,600 for repainting the interior of the companys offices.
- Other expenses
Other expenses include 2,310 for entertaining customers and a qualifying charitable donation of 500.
- Interest payable
Shisham limited issued loan notes on 1 October 2020. The capital raised was used for trading purposes. Interest of 24,740 in respect of the first six months of the loan was paid on 31 March 2021.
- Maximum capital allowances available for the financial year ended 31 March 2021 are 25,100.
Required:
- Assess Shisham Limiteds trading profits for the year ended 31 March 2021. Start with the profit before taxation of 335,160 and list all of the items in the statement of profit and loss indicating by the use of a zero (0) any items that do not require adjustment. Assume that the company claims maximum available capital allowances.
- Assess:
- Shisham Limiteds taxable total profits for the year ended 31 March 2021.
- Shisham Limiteds corporation tax liability for the year ended 31 March 2021.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started