Unit: Public Finance and Taxation
14 Questions| Sh. | |
| May 4: Purchases of goods (local) | 4,640,000 |
| May 6: Purchase of a computer | 162,400 |
| May 8: Return outwards | 139,200 |
| May 10: Legal fees | 62,640 |
| May 12: Imports Cost, Insurance and Freight (CIF) | 300,000 |
| May 14: Advance salaries and wages | 580,000 |
| May 16: Sales (local) | 5,916,000 |
| May 18: Export sales | 600,000 |
| May 20: Exempt sales | 1,840,000 |
| May 24: Printing and stationery | 27,840 |
| May 28: Electricity | 53,940 |
| 1 | Basic salary of Sh.300,000 per month net of pay as you earn (PAYE) of Sh.50,000 per month. |
| 2 | The employer paid for her passage of Sh.200,000 during the year. She used 30% of the amount to visit local tourist sites. |
| 3 | In March 2023, she bought 15,000 shares of the company at a price of Sh.30 per share although the market price was Sh.35 per share. At the end of the year she received a dividend of Sh.6,000. |
| 4 | She was provided with accommodation by the employer. The employer leased the house at a monthly rental charge of Sh.120,000. The house was fully furnished at a cost of Sh.400,000. She had a house servant whom the employer pays a salary of Sh.20,000 per month. |
| 5 | In the month of October 2023, she worked in the company’s headquarters in South Africa where she was tasked with a responsibility of training employees in a newly installed finance software. She received her salary for the month from the Kenya branch. |
| 6 | She was provided with a leased vehicle of 2000cc by the employer. The vehicle was leased from Betalite Motors at a monthly charge of Sh.60,000. Betalite Motors had bought the vehicle in January 2022 for Sh.3,200,000, but the value of the vehicle in January 2023 was Sh.2,400,000. |
| 7 | The employer paid for her life insurance cover amounting to Sh.240,000 during the year. |
| 8 | During the year, she fell sick and was admitted at a local private hospital. She paid a bill of Sh.180,000 which was reimbursed by the employer. The company has a policy that covers all senior managers and it provides for a maximum reimbursement of Sh.1,000,000 in a year. |
| 9 | Due to the nature of her work, the employer entered into an agreement with Laserbite hotel to be delivering her meals to the office from 1 April 2023. The cost of the meals was Sh.15,000 per month. |
| 10 | Her salary was adjusted upwards by Sh.30,000 per month on 1 November 2023 and backdated to 1 September 2023. |
| 11 | The employer contributed 15% of her basic salary to a registered pension scheme and she also contributed 7.5% to the same scheme. |
| 12 | She invested in the real estate and financial sector during the year where she earned the following incomes: |
| 12 | Sh. | |
| 1,200,000 | |
| 85,000 | |
| 255,000 | |
| 114,000 |
| Sh. | Sh. | |
| Sales | 5,780,000 | |
| General bad debts recovery | 75,000 | |
| Anticipated foreign exchange gain | 180,000 | |
| Capital gain on sale of land | 352,000 | |
| Insurance recovery on stolen vehicle | 320,000 | |
| Release of liability | 122,000 | |
| Interest from Ulinzi Sacco Ltd. | 34,000 | |
| Total income | 6,863,000 | |
| Less expenses: | ||
| Purchases | 3,706,000 | |
| Purchase of computers | 216,000 | |
| Repairs expenses | 682,000 | |
| Legal and professional fees | 816,000 | |
| Rent and rates | 244,000 | |
| Interest expenses | 166,000 | |
| General expenses | 642,000 | |
| Motor vehicle expenses | 560,000 | |
| Insurance | 187,000 | |
| Welfare expenses | 1,035,000 | |
| Audit and accounting fees | 95,000 | |
| Computer software and programs | 1,200,000 | |
| Travelling expenses | 64,000 | (9,613,000) |
| (2,750,000) |
| 1 | Legal and professional fees comprised: | ||
| Sh. | |||
| Legal fees on defense against alleged breach of trade contract | 180,000 | ||
| Legal fee on tax appeals | 64,800 | ||
| Land conveyance fees | 72,400 | ||
| Stamp duty | 36,600 | ||
| Negotiating a business loan | 25,400 | ||
| Recovery of bad debts | 45,000 | ||
| Signing a 100 year lease agreement | 128,400 | ||
| Purchase of partners private vehicle | 137,400 | ||
| Legal fee on renewal of patents | 126,000 | ||
| 816,000 | |||
| 2 | Repairs expenses comprised: | ||
| Sh. | |||
| Purchase of furniture | 260,000 | ||
| Designing and partioning a new office block | 341,000 | ||
| Repainting of old office block | 81,000 | ||
| 682,000 | |||
| 3 | General expenses included: | ||
| Sh. | |||
| Impairment of patent rights | 120,000 | ||
| Provision for general bad debts | 208,000 | ||
| Drawings of goods by partners | 314,000 |
| 4 | Purchases and sales were inclusive of value added tax (VAT) at the rate of 16%. |
| 5 | Closing inventory was valued at Sh.1,200,000 while opening inventory was valued at 10% of sales net of value added tax. Both opening and closing stocks were undervalued by 10% |
| 6 | Interest expenses include interest on partners’ capital of Sh.120,000 which was shared according to profit and loss sharing ratio. The partners agreed that they would not receive salaries until the business starts making profits. |
| Sh | |
| Factory building | 14,640,000 |
| Processing machinery | 4,712,000 |
| Computers | 384,000 |
| Conveyor belts | 1,240,000 |
| Staff canteen | 2,440,000 |
| Delivery vans (two) | 4,160,000 |
| Sewerage system | 1,280,000 |
| Generator | 400,000 |
| Godown | 2,600,000 |
| Heating plant | 1,400,000 |
| Lorry | 2,948,000 |
| Sports pavilion | 1,800,000 |
| Loose tools | 144,000 |
| 1 | The company purchased the following assets on 1 January 2023: |
| 1 | Sh. | |
| Furniture | 224,000 | |
| Saloon car | 3,400,000 | |
| Boilers | 768,000 | |
| Scanners | 112,000 | |
| Wheelbarrows | 180,000 | |
| Packaging machine | 1,200,000 |
| 2 | A staff clinic was constructed at a cost of Sh.2,080,000 and utilised with effect form 1 October 2023. |
| 3 | A borehole was drilled at a cost of Sh.800,000 and utilised with effect from 1 July 2023. |
| 4 | One of the delivery vans was involved in an accident on 1 March 2023 and was written off. The insurance company paid Sh.1,400,000 as full compensation on 1 December 2023. |
| 5 | A perimeter wall was constructed at a cost of Sh.1,200,000 and put in to use from 1 July 2023. |
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