Task 2: On 1 January 2013, Morris has started a sole trader business of printing-press preparing accounts on 31 December. His Profit and Loss Account for the year ended 31 December 2019 is as follows: 500,000 (200,000) 300,000 6,000 1,000 9,000 16,000 316,000 Sales Less: Cost of Sales Gross Profit Add: other Income Interest received on Debenture Interest from Individual Savings Account Dividend income Less: Expenses Depreciation Wages and Salaries Interest Expense Subscription Donation Bad and doubtful debt Gift and Entertainment Other Expense Repairs and maintenance Car Lease Rent Car Expenses Legal fees at the acquisition of land NET PROFIT 20,000 15000 6,000 2,000 5,000 3,000 4,500 2,500 8,500 8,000 6,800 500 (81,800) 234,200 Notes: 1. The daughter of Morris is also working for the business. Morris gave a salary of 6,000 to her. For the same work, another staff receives a salary of 4,000 2. Few of his customers became bankrupt and Morris trcated 1,600 as Bad and doubtful debt. Also, Bad and doubtful debts include 200 for Customer loan written off, 800 for supplier's loan written off, and 400 for former employee loan written off dos back 3. The donation includes 200 for Local Charity, 4,000 for National Charity, 800 is for the Political party 4. Subscription paid 900 for sports club membership of Morris and 300 for printer's association and the remaining is for business purposes 5. Interest expense includes 700, the interest on loan borrowed for the construction of the main Residence of Morris 6 Repairs and maintenance include 5,000 for adding a room to store the papers, 1,500 for the purchase of a packing machine, E200 for painting the building. The remaining 1,800 is revenue expenditure for business purposes 7. Other expenses include 200 staff parking fine during business hours, 100 parking fine of Morris during his official visit, 150 speeding fine for Morris, 500 for a penalty for not following the safety regulations and 50 is a wedding gift to staff remaining 1,500 is for business purposes 8. Gift and Entertainment: Morris arranged a staff party and spent 500 on that. Also, he arranged a party for customers for 800. He made so much gift to staff and customers which are listed below: Gift of pen drive (flash drive) costing 15 each for 10 staff and gift of chocolate box costing 10 cach for 10 staff Gift of calendar costing 5 each for 500 customers and gift of a box of Red Bull costing 8 por box to 50 customers A gift to his daughter on her birthday 50 9. Car Expenses Morris had 3 cars Car I is used by Morris only for personal use. The expense of this car is 2,000 Car 2 is used by Morris 30% for personal purposes. The expense of this car is 3,000. Car 3 is used by staff, 100% for personal purposes. The expense of this car is 1,800 10. Morris has taken a car on a rental basis for business for the annual rent of 8,000. The CO2 emission of the car was 140 g/km. 11. The capital allowance of the business for the year-end 31 December 2019 is calculated as 30,000 12. The trading loss for the year ended 31 December 2018 was 50,000 Required to: a) Calculate the adjusted trading Profit of the business of Morris for the year ended 31 December 2019. (5 marks) 7 b) Explain how to adjust the business loss of Morris for the year ended 31 December 2018 and show the adjustment in the computation. (1 mark) c) For the tax year 2019/20, Morris filed his Income tax return on 30 September 2021. Calculate the penalty payable by him. (1 mark) Task 2: On 1 January 2013, Morris has started a sole trader business of printing-press preparing accounts on 31 December. His Profit and Loss Account for the year ended 31 December 2019 is as follows: 500,000 (200,000) 300,000 6,000 1,000 9,000 16,000 316,000 Sales Less: Cost of Sales Gross Profit Add: other Income Interest received on Debenture Interest from Individual Savings Account Dividend income Less: Expenses Depreciation Wages and Salaries Interest Expense Subscription Donation Bad and doubtful debt Gift and Entertainment Other Expense Repairs and maintenance Car Lease Rent Car Expenses Legal fees at the acquisition of land NET PROFIT 20,000 15000 6,000 2,000 5,000 3,000 4,500 2,500 8,500 8,000 6,800 500 (81,800) 234,200 Notes: 1. The daughter of Morris is also working for the business. Morris gave a salary of 6,000 to her. For the same work, another staff receives a salary of 4,000 2. Few of his customers became bankrupt and Morris trcated 1,600 as Bad and doubtful debt. Also, Bad and doubtful debts include 200 for Customer loan written off, 800 for supplier's loan written off, and 400 for former employee loan written off dos back 3. The donation includes 200 for Local Charity, 4,000 for National Charity, 800 is for the Political party 4. Subscription paid 900 for sports club membership of Morris and 300 for printer's association and the remaining is for business purposes 5. Interest expense includes 700, the interest on loan borrowed for the construction of the main Residence of Morris 6 Repairs and maintenance include 5,000 for adding a room to store the papers, 1,500 for the purchase of a packing machine, E200 for painting the building. The remaining 1,800 is revenue expenditure for business purposes 7. Other expenses include 200 staff parking fine during business hours, 100 parking fine of Morris during his official visit, 150 speeding fine for Morris, 500 for a penalty for not following the safety regulations and 50 is a wedding gift to staff remaining 1,500 is for business purposes 8. Gift and Entertainment: Morris arranged a staff party and spent 500 on that. Also, he arranged a party for customers for 800. He made so much gift to staff and customers which are listed below: Gift of pen drive (flash drive) costing 15 each for 10 staff and gift of chocolate box costing 10 cach for 10 staff Gift of calendar costing 5 each for 500 customers and gift of a box of Red Bull costing 8 por box to 50 customers A gift to his daughter on her birthday 50 9. Car Expenses Morris had 3 cars Car I is used by Morris only for personal use. The expense of this car is 2,000 Car 2 is used by Morris 30% for personal purposes. The expense of this car is 3,000. Car 3 is used by staff, 100% for personal purposes. The expense of this car is 1,800 10. Morris has taken a car on a rental basis for business for the annual rent of 8,000. The CO2 emission of the car was 140 g/km. 11. The capital allowance of the business for the year-end 31 December 2019 is calculated as 30,000 12. The trading loss for the year ended 31 December 2018 was 50,000 Required to: a) Calculate the adjusted trading Profit of the business of Morris for the year ended 31 December 2019. (5 marks) 7 b) Explain how to adjust the business loss of Morris for the year ended 31 December 2018 and show the adjustment in the computation. (1 mark) c) For the tax year 2019/20, Morris filed his Income tax return on 30 September 2021. Calculate the penalty payable by him. (1 mark)