Question
Sports Folks Ltd, incorporated in 1998, is a UK resident company which manufactures a variety of sports goods for the local and overseas markets. The
Sports Folks Ltd, incorporated in 1998, is a UK resident company which manufactures a variety of sports goods for the local and overseas markets. The detailed statement of profit or loss for the year ended on March 31 2018 is as follows:
Gross profit 839,000
Loan interest received (Note 1) 11,300
Profit from sale of plant asset (Note 2) 29,293
Income from property (Note 3) 9,000
Bank interest received (Note 4) 1,800 (51,393)
787,607
Expenses:
Depreciation 38,100
Entertainment (Note 5) 9,200
Gifts (Note 6) 2,600
Professional fees (Note 7) 29,300
Repairs, renewals & maintenance (Note 8) 49,320
Salaries and wages 349,999
Directors remuneration 149,000 (627,519)
Finance cost
Interest payable (18,900)
Profit before taxation 141,188
Notes:
1 Loan interest received
The interest was received from loans to employees and is the amount accrued up to 31 March 2018. All loans were given on market lending rates.
2. A plan item was sold for 180,000 on profit of 29,293. The chargeable gain on sale has been computed to 12,590
3. Income from property is a rental income in respect of a company owned labor accommodation let to an unconnected party. The amount shown is the amount accrued up to 31 March 2018. However, only half of the amount shown has been received by 31 March 2018
4. Bank interest received is in respect of a deposit held for non-trading purposes and is the amount accrued up to 31 March 2018.
5. Entertainment:
Entertaining suppliers 5,600
Entertaining employees 3,600
6. Gifts:
Gifts to customers (pens costing 40 each and displaying companys name) 900
Gifts to customers (food hampers costing 45 each, displaying companys name) 1700
7. Professional fees:
Accountancy fee 16,300
Legal fee in connection of loan 9,500
issued for financing trading activities
Legal fee in connection with fine for breach of 3,500
workplace safety
8. Repairs, renewals & maintenance (Note 8)
Construction of two accommodation 32,400
rooms for security staff
Annual maintenance cost of cooling equipment 8,320
Repairs and maintenance of company cars used 8,600
by employees/directors
9. Capital allowances:
Written down value (WDV) brought forward of main pool is 79,100. Sports Folks Ltd acquired a new machinery item at the cost of 41,310. In addition, company acquired two motor cars with following details:
Motor car (1) purchased second-hand has CO2 emissions of 65g/km for 14,000
Motor car (2) purchased new has CO2 emissions of 110g/km for 13,450
Required:
- Compute trading profits of Sports Folks Ltd for the year ended March 31 2018. Start with the profit before taxation of 141,188 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.
- Compute taxable total profits for the year ended March 31 2018?
Compute Sports Folks Ltd corporation tax liability for the year ended March 31 2018.
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