Unit: Public Finance and Taxation
17 Questions| Sh. | ||
| December 4: | Purchases | 725,000 |
| December 8: | Return outwards | 58,000 |
| December 12: | Catering expenses | 87,000 |
| December 15: | Repairs of delivery van | 29,000 |
| December 18: | Audit fees | 26,100 |
| December 20: | Cost insurance and freight (CIF) imports | 125,000 |
| December 22: | Sales (local) | 1,131,000 |
| December 24: | Sales (export) | 250,000 |
| December 27: | Exempt sales | 350,000 |
| December 28: | Photocopying | 11,600 |
| December 30: | Telephone bill | 23,200 |
| 1 | His basic salary was Sh.120,000 per month net of PAYE of Sh.48,000 per month. |
| 2 | He was provided with lunch by the employees from 1 August 2022 of Sh.6,000 per month. |
| 3 | He enjoyed a medical allowance from the company which is only available to senior managers. The allowance was Sh.12,500 per month. |
| 4 | The company paid for him Life Insurance premiums of Sh.4,800 per month for each member of his family from 1 September 2022. This included himself, wife and the daughter. |
| 5 | During the year, the employer paid a total of Sh.200,000 as school fees for his daughter. This amount was allowed in the company’s income statement. |
| 6 | He was provided with a fully furnished house with electricity and water. The employer paid monthly rent of Sh.50,000 for the house and deducted 5% of his basic salary for rent. The cost of furniture was Sh.240,000 while the monthly electricity bill and water bill amounted to Sh.1,800 and Sh.1,000 per month respectively. |
| 7 | On 1 October 2022, the company provided him with the following:
|
| 8 | He contributed 15% of his monthly basic salary towards a registered pension scheme while the employer contributed 10% of his basic salary towards the same scheme. |
| 9 | Other incomes for the year include: He has invested in the real estate and from his rental houses, he reported a net rental income of Sh.2,400,000 after deducting the following expenditure: |
| Sh. | ||
| 9 | Caretaker wages | 420,000 |
| Fencing cost | 640,000 | |
| Loan repayment | 320,000 | |
| Monthly rental income tax | 487,820 | |
| Insurance, rent and rates | 248,000 | |
| Advertising | 360,000 | |
| Partitioning and CCTV cameras | 222,000 | |
| Repairs and maintenance | 268,200 | |
| 2,966,020 |
| 10 | Dividend received from United Millers Co-Operative Society was Sh.306,000 net and interest received from Fanaka Bank Ltd. was Sh.240,000 net. |
| Sh. | Sh. | |
| Gross profit | 4,200,000 | |
| Sale of delivery van proceeds | 1,400,000 | |
| Expenses: | ||
| Advertisement | 380,000 | |
| Depreciation | 140,000 | |
| Rent and rates | 120,000 | |
| General expenses | 450,000 | |
| Value added tax (VAT) | 150,000 | |
| Bad debts | 250,000 | |
| Purchase of furniture | 620,000 | |
| Salaries and wages | 900,000 | |
| Legal fees | 540,000 | |
| Goodwill written off | 225,000 | |
| Interest on capital - Mambo | 80,000 | |
| Interest on capital - Moto | 140,000 | (4,003,000) |
| Net profit | 1,597,000 |
| 1 | Advertisement expenses include Sh.120,000 spent on acquisition of a neon sign. |
| 2 | General expenses comprised the following: | Sh. |
| Partners end year party | 150,000 | |
| Staff catering services | 90,000 | |
| Embezzlement by cashier | 210,000 |
| 3 | Bad debts represented the general provision made for the year. |
| 4 | Legal fees comprised the following: | Sh. |
| Parking fines | 130,000 | |
| Settling a dispute with a customer | 200,000 | |
| Appeal on a tax assessment | 210,000 |
| 5 | Investment allowances were agreed at Sh.380,000 with the Commissioner of domestic taxes. |
| 1 | Sales for the year were reported as follows: |
| 1 | Sh. | |
| January - April | 1,800,000 | |
| May - August | 2,200,000 | |
| September - December | 3,200,000 |
| 2 | The business purchased goods four times during the year as follows: |
| Sh. | ||
| January | 600,000 | |
| May | 800,000 | |
| September | 200,000 | |
| December | 500,000 |
| 3 | Expenses incurred during the year were as follows: |
| Sh. | ||
| Salaries and wages | 260,000 | |
| Electricity expenses | 180,000 | |
| Legal expenses | 100,000 | |
| Stationery | 60,000 | |
| Water expenses | 28,000 | |
| Rent expenses | 280,000 |
| Sky Rift Growers Ltd. Statement of profit or loss for the year ended 31 December 2022 |
| Sh. | Sh. | |
| Sales | 28,000,000 | |
| Dividend income | 270,000 | |
| Interest income (net) | 264,000 | |
| Surplus from pension scheme | 120,000 | |
| 28,654,000 | ||
| Expenses | ||
| Administration expenses | 1,570,000 | |
| Clearing land and planting roses | 8,940,000 | |
| General insurance | 200,800 | |
| Bad debts | 460,000 | |
| Lease expenses | 600,000 | |
| Donations | 42,000 | |
| Repairs and renewals | 252,000 | |
| Loss on sale of investment | 96,000 | |
| Legal and professional fees | 300,000 | |
| Transport costs | 296,000 | |
| Depreciation | 840,000 | |
| Farm works | 12,640,000 | |
| Loan repayment | 280,000 | |
| Pension contribution | 350,000 | |
| Compensation to staff for work injury | 420,600 | |
| Motor vehicle expenses | 186,000 | (27,473,400) |
| 1,180,600 |
| 1 | The company’s main activity is growing flowers for local and export market. |
| 2 | The company has leased the land on which it grows flowers from Enkalop Roses Ltd. One of its shareholders, Enkalop Roses Ltd. owns 25% of the share capital in Sky Rift Growers Ltd. |
| 3 | Donations were made to the National Flowers Council to support its activities. |
| 4 | The loss on sale of investment relates to sale of shares that Sky Rift Growers Ltd. held in a quoted company |
| 4 | Bad debts comprise: | Sh. |
| General provision | 220,000 | |
| Specific provision | 240,000 |
| 5 | The surplus from pension scheme arose after an actuarial valuation was carried out by a firm of actuaries. |
| 6 | Dividend income was received from Enkalop Roses Ltd. |
| 8 | Repairs and renewals were analysed as follows: |
| 8 | Sh. | |
| Repair of plough | 97,200 | |
| Repair of green house | 34,800 | |
| Office partitions | 120,000 | |
| 252,000 |
| 9 | Farmworks cost comprises: | Sh. |
| Farmhouse where the farm manager resides | 5,100,000 | |
| Irrigation system (including water pump Sh.120,000) | 800,000 | |
| Electrification network | 1,200,000 | |
| Construction of gabions | 300,000 | |
| Construction of godowns at the firm | 2,400,000 | |
| Plough and lawn mower | 380,000 | |
| Labour quarters for workers | 1,800,000 | |
| Farm implements | 540,000 | |
| Surveillance cameras | 120,000 | |
| Total | 12,640,000 |
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