Unit: Public Finance and Taxation
15 Questions| 2 August: | Purchased 16 digital television sets from Dubai Ltd. for Sh.58,000 each. |
| 2 August: | Sold 4 video cameras to the Ministry of Tourism for Sh.72,500 each. |
| 4 August: | Paid audit fees to Hekima and Associates CPA of Sh.34,800. |
| 5 August: | Sold 8 digital television sets to Mambo Restaurant in Uganda for Sh.130,500 each. |
| 9 August: | Purchased 10 slide projectors for Sh.104,400 each from Infor Tech Limited. |
| 10 August: | Purchased office stationery for Sh. 17,400 and paid by cheque. |
| 12 August: | Sold 4 flashbulbs that had cost Sh.420,000 for Sh.116,000 each. |
| 16 August: | Mambo Restaurant returned 2 television sets and was issued with a debit note of the equivalent amount. |
| 19 August: | Paid electricity bills amounting to Sh.40.600. |
| 21 August: | Sold 8 television sets to local customers for Sh. 104,400 each. |
| 24 August: | Sold slide projectors for Sh.232,000 to Umoja Communications Ltd. |
| 27 August: | Paid Sh.58,000 for repairing the director's motor vehicle. |
| 28 August: | Purchased electronic appliances from local suppliers for Sh.1,160,000. |
| 30 August: | Paid water bills of Sh.21,600 in cash for water supplied by the county water services board during the month. |
| 1 | Basic salary of Sh. 144,600 per month net of PAYE tax of Sh. 19,600. |
| 2 | He was provided with a land cruiser whose accumulated depreciation as at January 2020 was Sh.130,000 while the net book value was Sh.1,600,000. |
| 3 | He was provided with a fully furnished house. The cost of the furniture was Sh.250,000. The house had a fixed telephone. The average telephone bill paid by the employer per month was Sh.6,000. |
| 4 | On 1 September 2020, he moved into his own house which he had acquired through a 15% mortgage loan of. Sh.4,000,000 on 1 May 2020. |
| 5 | He is a member of a home ownership saving plan where he had contributed Sh.4,800 per month towards the scheme up to 30 April 2020. |
| 6 | On 1 July 2020, he obtained a loan of Sh.2,400,000 from his employer at an interest rate of 7% per annum. During this period the Revenue Authority prescribed interest rate was 12% per annum. |
| 7 | He was out of his workstation in the month of August for 10 days on official duty. The company paid him an out-of-pocket allowance of Sh.4,800 per day. |
| 8 | His salary was increased with effect from I September 2020 by Sh.8,000 and back dated to 1 May 2020. |
| 9 | The employer paid school fees for Alex Makali's children amounting to Sh.148.000. This expense was not taxed on the employer. |
| 10 | He is a member of a registered retirement pension scheme where he contributed Sh.30.000 per month towards the scheme. The employer contributed a similar amount. |
| 11 | His other incomes included:
|
| 12 | He secured a life insurance cover for his family of Sh.8,000 per month with effect from 1 October, 2020. |
| Sh. | |
| Factory land and building | 82,000,000 |
| Conveyor belts | 6,200,000 |
| Furniture and fittings | 350,000 |
| Farm labour quarters | 4,800,000 |
| Coffee milling machinery | 4,200,000 |
| Irrigation system | 1,480,000 |
| Borehole | 2,360,000 |
| Construction of gabions | 1,120,000 |
| Lorry (3.5 tonnes) | 3,400,000 |
| Fencing of the farm | 780,000 |
| Farmhouse | 2,620,000 |
| Tractor | 3,600,000 |
| Godown | 1,860,000 |
| Factory perimeter wall | 948,000 |
| Delivery van | 2,600,000 |
| Trailer for tractor | 520,000 |
| Computers | 720,000 |
| 2 Saloon cars (each costing Sh.3,300,000) | 6,600,000 |
| Sports pavilion | 1,840,000 |
| Sh. | ||
| Office curtains | 320,000 | |
| Fax machine | 180,000 | |
| Water pump | 560,000 | |
| Packaging machine | 1,720,000 |
| Sh."000" | Sh."000" | |
| Sales (inclusive of VAT at 14%) | 114,000 | |
| Cost of goods sold | (75,690) | |
| Gross profit | 38,310 | |
| Decrease in provision for bad debts | 480 | |
| Dividends froma subsidiary company (Net) | 1,500 | |
| Rental income | 1,460 | |
| Foreign exchange gains realised | 240 | |
| Capital gain on sale of building | ......390 | |
| 42,380 | ||
| Less expenses: | ||
| Salaries and wages | 12,670 | |
| Subscriptions to trade association | 120 | |
| Legal and professional fees | 3,600 | |
| Audit fees | 720 | |
| Donations to women welfare association | 480 | |
| Estate management fees for rented property | 136 | |
| Impairment of rental property | 180 | |
| Purchase of furniture | 124 | |
| Purchase of computers | 150 | |
| Purchase of saloon car | 3,400 | |
| Rent and rates | 670 | |
| Advertisement expenses | 1,380 | (23,630) |
| Net profit | 18,750 |
| 1 | Two thirds of the cost of goods sold comprised of purchases, which are overcast by 20%. |
2 | Salaries and wages include: | Sh."000" |
| Redundancy payments to former employees | 4,800 | |
| Directors bonuses | 1,960 | |
| Christmas party for directors' families | 474 | |
| Directors allowances | 360 | |
3 | Legal and professional fees comprised: | Sh."000" |
| Processing of title deeds for company piece of land | 720 | |
| Registering of trade marks | 366 | |
| Renewal of 60-year lease | 284 | |
| Negotiating a bank loan | 460 | |
| Tax appeal against a tax assessment | 188 | |
| Settling customer's dispute | 320 | |
| Parking fines | 360 | |
| Defending a director for breach of law | 202 | |
| Instalment tax paid | ...700 | |
| 3,600 |
| 4 | Audit fees include Sh. 124,000 for penalties for late filing oftax returns with the Revenue Authority. |
| 5 | Advertisement expenses comprise; bill board for Sh.380,000, Neon sign Sh.240.000 and Sh. 150,000 for hosting the company website. |
| 6 | Purchases figure includes the cost of a forklift amounting to Sh.720,000 which was also inflated by 20% |
| 7 | Investment allowances were agreed with the Commissioner for Revenue Authority at Sh.2.840.000. |
| 8 | The corporate tax rate during the year was 25%. |
Want to join the discussion?
Log in to post comments and interact with tutors.
Login to Comment