Unit: Public Finance and Taxation
16 Questions| Sh. | |
| Sales at standard rate | 6,199,997 |
| Exports to Egypt | 800,000 |
| Purchases at standard rate | 4,000,000 |
| Purchase of oil and fuel for delivery van | 360,500 |
| Repairs of office furniture | 64,000 |
| Audit fees | 160,000 |
| Salaries and wages | 1,480,000 |
| Purchase of stationery | 68,000 |
| Electricity bills for the month (not paid) | 56,400 |
| Legal fees | 48,600 |
| Purchases from traders not registered for VAT | 580,000 |
| Zero rated sales | 400,000 |
| 1 | He was entitled to a basic salary of Sh.400,000 per month (PAYE of Sh.120,000 per month was deducted). |
| 2 | He was also entitled to an annual bonus of Sh.120,000 during the year. The bonus for the year 2023 was however not paid until February 2024. |
| 3 | The employer provided him with a motor vehicle of 2600cc that had cost the company Sh.3,200,000 in the year 2021. The vehicle was valued at Sh.2,500,000 at the beginning of the year 2023. |
| 4 | His annual mortgage repayment of Sh.820,000 inclusive of interest of Sh.180,000 was settled by the employer. The loan was obtained from Elite Bank on 1 January 2023 to purchase own residential house. |
| 5 | The following deductions were made from his salary during the year: ...................................................................................... Sh. Subscription to Jenga Golf club 66,000 Contribution to a registered pension scheme 180,000 |
| 6 | He received a gross dividend of Sh.80,000 from his shares in Safari Real Estate Ltd. where the withholding tax was paid by the company. |
| 7 | His wife Janet Musyoka is employed by Bright Farmers Co-operative Society as a general manager at a basic salary of Sh.160,000 per month. |
| 8 | She is housed within the co-operative society’s farm where she contributes 5% of her basic salary as rent. She received free farm produce worth Sh.24,000 during the year. |
| 9 | Her other income comprised of:
|
| 10 | John Musyoka and his wife Janet Musyoka have been filing separate tax returns to the revenue authority. |
| 11 | Ignore computation of affordable housing levy. |
| Sh. | Sh, | |
| Turnover (inclusive of VAT at the rate of 16%) | 9,744,000 | |
| Profit on sale of motor vehicle | 260,000 | |
| Insurance compensation for stock destroyed by fire | 374,200 | |
| 10,378,200 | ||
| Less expenses: | ||
| Purchases | 2,880,000 | |
| New furniture | 400,000 | |
| Salaries and wages | 380,000 | |
| Legal expenses | 420,000 | |
| General expenses | 1,560,000 | |
| Corporation tax | 464,000 | |
| Advertisement | 520,000 | |
| Audit fees | 194,000 | |
| Office rent | 240,000 | |
| Purchased goodwill | 90,000 | |
| Repairs and maintenance | 360,000 | (7,508,000) |
| 2,870,200 |
| 1 | Purchases were overstated by 20% and includes carriage cost of Sh.20,000 for furniture for use in the business. |
| 2 | Legal expenses comprised: | Sh. |
| Conveyance fees - Company land | 40,000 | |
| Defending the company against tax evasion case | 68,000 | |
| Registration of trade mark | 42,000 | |
| Negotiation of goodwill | 40,000 | |
| Renewal of 100-year lease agreement | 36,000 | |
| Loan negotiation fees | 74,000 | |
| Defending company against trade dispute | 20,000 | |
| Negotiating employee salaries with Union | 100,000 | |
| 420,000 | ||
| 3 | General expenses included: | Sh. |
| General allowance on bad debts | 38,400 | |
| Office partitions | 60,000 | |
| Purchase of photocopier | 180,000 | |
| Purchase of computers | 350,000 | |
| Donations to charitable organisations | 124,000 | |
| Construction of sewerage plant | 680,000 | |
| 4 | Repairs and maintenance included: | Sh. |
| Purchase of metallic doors | 28,200 | |
| Purchase of motor vehicle engine | 54,000 | |
| Purchase of plastic tank | 60,000 | |
| Construction of fire exit | 184,000 | |
| 5 | Advertisement costs include software expenses for office computers at a cost of Sh.190,000. |
| Sh. | |
| Land | 12,500,000 |
| Factory building | 44,000,000 |
| Office building | 8,000,000 |
| Processing machinery | 2,400,000 |
| Patents | 400,000 |
| File cabinet | 100,000 |
| Office furniture | 480,000 |
| Electric ceiling fans | 230,000 |
| Delivery vans | 12,000,000 |
| LCD television | 120,000 |
| Photocopier | 280,000 |
| Computers | 1,800,000 |
| Telecommunication equipment | 640,000 |
| Borehole | 2,400,000 |
| Water tanks | 720,000 |
| Water pump | 360,000 |
| 3 lorries (4 tonnes) | 9,600,000 |
| 1 | The company disposed of computers and electric ceiling fans that were not suitable for the company on 1 January 2023 which had cost Sh.240,000 and Sh.80,000 respectively. |
| 2 | The company acquired the following assets during the year 2023: |
| Sh. | ||
| Trucks and trailers | 4,800,000 | |
| Data handling machine | 360,000 | |
| 2-saloon cars (each Sh.3,600,000) | 7,200,000 | |
| Workshop machinery | 2,100,000 |
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