Imran owns a business which operates from rented premises. He has a 10-year lease on the premises
Question:
Imran owns a business which operates from rented premises. He has a 10-year lease on the premises and he paid a premium of £7,000 on 1 January 2023 in order to renew this lease. His income statement for the year to 31 December 2023 is as follows:
Notes:
1. Wages include £5,800 for Imran's wife (who works part-time for the business) and £1,000 for his son (a student who does not work for the business at all). Also included in wages are Imran's personal income tax and personal National Insurance contributions totalling £3,524.
2. Insurance includes Imran's private medical insurance premium of £1,405.
3. It has been agreed that one-sixth of telephone costs relate to private use.
4. Repairs include £750 for the cost of essential repairs to a newly-acquired second-hand forklift truck which could not be used until the repairs had been carried out.
5. Motor expenses are as follows:
It has been agreed that one-tenth of motor expenses relate to private use.
6. Legal and professional expenses comprise legal fees of £850 (on renewal of Imran's 10-year lease), debt collection fees of £1,250 and accountancy fees of £900.
7. Sundry expenses are:
8. Trade debts of £500 were written off during the year. The general allowance for doubtful debts was reduced by £100 and the specific allowance for doubtful debts was increased by £460.
9. During the year, Imran appropriated trading stock costing £220 from the business for personal use, paying £220 of his own money into the business bank account. His gross profit percentage on turnover is 20%.
Compute Imran's trading profit (before deduction of capital allowances) for the year to 31 December 2023.
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