A7 Claud Chapperon is a self-employed wholesale clothing distributor who began trading on 1 July 2002. His summarised accounts for the year to 30 June 2009 are shown below

(figures in brackets refer to notes).

£ £

Sales (1) 400,000 Opening inventory (2) 40,000 Purchases 224,000

————

264,000 Closing inventory (2) 32,000 232,000

———— ————

Gross profit 168,000 Wages and national insurance (3) 52,600 Rent and rates 29,100 Repairs and renewals (4) 3,490 Miscellaneous expenses (5) 665 Taxation (Claud's own income tax) 17,549 Bad debts (6) 820 Legal expenses (7) 1,060 Depreciation 570 Lease rental on Claud's car (8) 8,400 Loss on sale of office furniture 60 Gift Aid donations (9) 200 Transport costs 4,141 Interest (10) 990 Running expenses of Claud's car (11) 2,000 Premium on lease (12) 6,000 Lighting and heating 1,250 Sundry expenses (all allowable) 710 Relocation expenditure (13) 2,395 132,000

——— ————

Net profit 36,000

————

Notes:

1. Sales include £500 reimbursed by Claud's family for clothing taken from stock.

The reimbursement represented cost price.

2. The basis of both the opening and closing inventory valuations was "lower of cost or market value" less a general reserve of 50%.

3. Included in wages are Claud's drawings of £50 per week, his NICs of £121 for the year and his wife's wages and NICs totalling £14,750. His wife works full-time in the business as a secretary.

4. The charge for repairs and renewals includes £3,111 for fitting protective covers over the factory windows and doors to prevent burglary.

5. Miscellaneous expenses comprise:
£
Theft of money by employee 65 Political donation to Green Party 100 Gifts of 100 "Chapperon" calendars 500 ——
665 ——
6. Bad debts comprise:
£
Trade debt written off 720 Loan to former employee written off (not made for trade purposes) 250 Reduction in general allowance (150)
——
820 ——
7. Legal expenses comprise:
£
Defending action re alleged faulty goods 330 Costs re lease of new larger premises 250 Unsuccessful appeal against previous year's income tax assessment 200 Defending Claud in connection with speeding offence 190 Debt collection 90 ——
1,060 ——
8. Claud's leased car had a retail price of £20,000 and was leased from 1 July 2008 to 30 June 2009. The car is petrol-driven and is not a low-emission car.
9. Gift Aid donations consist of £120 paid to the local children's hospital and £80 paid to Oxfam. Both payments were made on 30 April 2009.
10. Interest is as follows:
£
Bank overdraft interest (business account) 1,020 Interest on overdue tax 130 Interest credited on NSB investment a/c (see note 14) (160)
——
990 ——
11. HM Revenue and Customs has agreed that one-third of Claud's mileage is private.
Included in the charge for motor running expenses is £65 for a speeding fine incurred by Claud whilst delivering goods to a customer.
12. The premium was for a lease of six years. The lease began on 1 July 2008.
13. The relocation expenditure was incurred in transferring the business to new and larger premises.

14. Interest recently credited to the NSB investment account is as follows:
£
31 December 2008 160 31 December 2009 70 The following information is also provided:
(i) Capital allowances for the year to 30 June 2009 are £480.
(ii) Claud was born in 1953. He made net contributions of £9,880 to a registered pension scheme during 2009-10. His wife was also born in 1953.
You are required:

(a) To prepare a profit adjustment statement in respect of the period of account to 30 June 2009, showing the trading income for 2009-10.

(b) To calculate the Class 4 NICs payable by Claud for 2009-10.

(c) To prepare an estimate of Claud's income tax borne for 2009-10. (ACCA)