Unit: Public Finance and Taxation
15 Questions| Sh. | |
| Export sales | 375,000 |
| Imported goods for resale (dutible value) | 2,250,000 |
| Telephone expenses | 180,000 |
| Audit fees | 450,000 |
| Exempt sales | 1,460,000 |
| Purchase at zero rate | 600,000 |
| Purchase at standard rates | 3,700,000 |
| Sales at standard rate | 8,750,000 |
| 1 | His employment contract provided for the following: | |
| Sh. | ||
| Basic monthly salary | 182,500 | |
| Transport allowance per month | 12,000 | |
| Leave pay (paid in December) | 60,000 |
| 2 | He was accommodated in a company owned house where he was deducted Sh.25,000 per month as nominal rent. If the house had been rented at market value, the company could have been charging monthly rentals of Sh.45,000. The company furnished the house for him at Sh.260,000. |
| 3 | He was paid Sh.120,000 as a labour day award by the company for being the most hard working and committed employee during the year. |
| 4 | The company has a registered pension scheme for its employees where it contributes 15% of each employees’ basic salary. Henry Musoki contributed 10% of his monthly basic salary towards the scheme. |
| 5 | He was enrolled to a medical scheme with Bahati Insurance Ltd. where he spent Sh.230,000 on medical bills during the year. The medical scheme catered for senior employees only. |
| 6 | His wife was given goods worth Sh.180,000 by the company during the Christmas season. |
| 7 | The company provided him with a cook and a security guard from 1 October 2021 where it paid them monthly salaries of Sh.15,000 and Sh.20,000 respectively. |
| 8 | On 1 July 2021, he secured an education insurance policy for his child at an annual premium of Sh.150,000 payable by the company. |
| 9 | He was out of the work station in the month of September 2021 for 8 days for which he was paid a daily per diem allowance of Sh.5,000. |
| 10 | PAYE deducted by the company from his salary was Sh.46,500 per month. |
| Sh. | ||
| Gross profit | 32,000 | |
| Less: General expenses | 1,400 | |
| Loan repayment | 1,600 | |
| Directors fees | 4,200 | |
| VAT paid | 2,700 | |
| Depreciation | 5,700 | |
| Salaries and wages | 2,400 | |
| Donations to a political party | 780 | |
| Interest expense | 4,200 | |
| Instalment tax paid | 600 | |
| Dividends paid | 1,005 | |
| Repairs and maintenance | 2,250 | (26,835) |
| Net profit for the year | 5,165 |
| 1 | On 1 January 2021, Parkim Ltd. purchased an industrial building from Samba Ltd., a contractor for Sh.200 million. The following details were availed that comprised the total purchase price for the industrial building: |
| 1 | Sh.“000” | |
| Land | 22,000 | |
| Demolition of old building site | 10,000 | |
| Labour quarters | 60,000 | |
| Factory building | 90,000 | |
| Perimeter wall | 5,000 | |
| Drainage and sewerage system | 13,000 | |
| 200,000 |
| 2 | The factory building above houses a warehouse costing Sh.7,000,000, administration block costing Sh.7,000,000 and a showroom at a cost of Sh.4,000,000. |
| 3 | Parkim Ltd. purchased and installed a processing machinery in the factory at a cost of Sh.40,000,000 on 2 January 2021 and started manufacturing leather products. The cost of processing machinery included workshop machine and a boiler at a cost of Sh.5,000,000 and Sh.6,000,000 respectively. |
| 4 | The following additional assets were acquired during the year ended 31 December 2021:
|
| 5 | Interest expense include: | |
| - Hire purchase interest for the computers | 140,000 | |
| - Interest on overdue loan | 200,000 | |
| - Provision for interest on a loan to be obtained to expand the business | 752,000 | |
| - Interest on unpaid tax | 448,000 |
| 6 | Gross profit included anticipated foreign exchange gain of Sh.2,000,000 and a reduction in general bad debts of Sh.620,000. |
| Sh. | Sh. | |
| Gross profit | 7,020,000 | |
| VAT refund | 102,500 | |
| Foreign exchange gain | 485,000 | |
| Dividend income (net) | 562,500 | |
| Profit on disposal of furniture | 591,000 | |
| Rental income | 415,000 | |
| 9,176,000 | ||
| Less expenses: | ||
| Insurance premiums | 480,000 | |
| Legal fees | 1,556,250 | |
| Depreciation | 575,000 | |
| Repairs and maintenance | 2,250,000 | |
| VAT paid | 233,750 | |
| Sundry expenses | 2,702,500 | |
| Interest on capital: Kamala | 407,500 | |
| Interest on capital: Susan | 185,000 | |
| Interest on capital: Kubasu | 146,000 | |
| Motor vehicle expenses | 528,500 | |
| Custom duty | 227,500 | |
| Accountancy fees | 575,000 | |
| Bad and doubtful debts | 155,000 | |
| Rates and rent | 410,000 | |
| Salaries and wages | 1,700,000 | (12,132,000) |
| Net loss | (2,956,000) |
| 1 | Insurance premiums include Sh.282,500 paid to insure Susan’s private car. |
| 2 | Legal fees include: | |
| Sh. | ||
| Parking fines | 150,000 | |
| Settling a dispute with a customer | 102,500 | |
| Appeal against a tax assessment | 62,500 | |
| Court expenses for breach of a contract | 400,000 | |
| Preparation of tender documents | 235,000 | |
| 3 | Sundry expenses include: | |
| Sh. | ||
| Interest charged on hire purchase | 425,000 | |
| Cash embezzled by the cashier | 565,000 | |
| Registration of a trade mark | 281,250 | |
| 4 | Repairs and maintenance comprised the following: | |
| Sh. | ||
| Repair of furniture | 22,500 | |
| Installation of surveillance cameras | 812,500 | |
| Cost of office furniture | 525,000 |
| 5 | The partners took goods for personal use which had a cost price Sh.225,000. The gross profit margin was 20%, as recorded in partnership books of account. |
| 6 | The investment allowances were agreed with the revenue authority at Sh.1,475,000 during the year ended 31 December 2021. |
| 7 | Salaries and wages included salaries to partners as follows: Sh. Kamala 600,000 Susan 450,000 Kubasu 225,000 |
Want to join the discussion?
Log in to post comments and interact with tutors.
Login to Comment