Unit: Public Finance and Taxation
17 Questions| Income: | Sh. |
| Sales to unregistered customers | 2,337,480 |
| Sales to registered customers | 5,939,483 |
| 8,276,963 | |
| Expenditure: | |
| Purchases from VAT registered suppliers | 3,617,924 |
| Purchases from VAT unregistered suppliers | 1,780,020 |
| Depreciation | 240,600 |
| Electricity | 204,450 |
| Printing and stationery | 66,700 |
| Motor vehicle parking charges | 42,050 |
| Water bill | 23,200 |
| Legal fees | 133,400 |
| Motor vehicle fuel | 167,400 |
| Repair and maintenance | 105,850 |
| Computer software | 49,532 |
| Salary and wages | 960,000 |
| Sh. | ||
| Salary (sales person) | 1,050,000 | |
| VAT paid | 180,000 | |
| Rent | 680,000 | |
| Electricity | 30,000 | |
| Furniture and fittings | 250,000 | |
| Computers | 300,000 |
| Sh. | |
| Factory building | 24,200,000 |
| Land | 16,000,000 |
| Processing machinery | 12,500,000 |
| Power generator | 1,800,000 |
| Delivery van | 3,600,000 |
| Computers | 650,000 |
| Staff canteen | 2,350,000 |
| Boilers | 800,000 |
| Computer software | 420,000 |
| Staff clinic | 960,000 |
| Lorry (4 tonnes) | 3,200,000 |
| Duplicating machines | 240,000 |
| Furniture and fittings | 530,000 |
| 1 | The factory building includes the cost of a showroom and a retail shop of Sh.1,850,000 and Sh.1,690,000 respectively. |
| 2 | A perimeter wall was constructed at a cost of Sh.4,200,000 and utilised from 1 October 2021. |
| 3 | The company acquired the following additional assets during the year ended 31 December 2021: |
| 3 | Asset | Cost Sh. | Date of first use |
| 2 saloon cars for directors at (Sh.4,000,000 each) | 8,000,000 | 12 January 2021 | |
| Plant and machinery | 680,000 | 20 January 2021 | |
| Mitsubishi canter | 3,200,000 | 20 January 2021 | |
| Electronic type-writers | 190,000 | 2 March 2021 | |
| Labour quarters | 2,400,000 | 1 June 2021 | |
| Parking bay | 560,000 | 1 June 2021 | |
| Mobile forklift | 3,000,000 | 10 October 2021 | |
| Water pump | 280,000 | 15 October 2021 | |
| Calculators | 10,000 | 1 December 2021 | |
| Conveyor belts | 1,800,000 | 1 December 2021 | |
| Workshop machine | 720,000 | 5 December 2021 |
| 4 | In June 2021, one of the saloon cars was involved in an accident and the insurance company paid Sh.3,000,000 as compensation. |
| 5 | A borehole was drilled at a cost of Sh.1,400,000 and put in to use on 1 November 2021. |
| 6 | The company made a gross profit of Sh.56,000,000 during the year ended 31 December 2021. |
| 7 | The following were the summary of operating expenses incurred during the year ended 31 December 2021: |
| 7 | Sh. | |
| Selling and distribution expenses | 8,400,000 | |
| Administrative expenses | 4,200,800 | |
| Depreciation | 16,000,000 | |
| Instalment tax paid | 780,000 | |
| Tax penalty and interest paid | 420,000 | |
| Bad debt written off | 120,000 |
| Sh. | Sh. | |
| Sales | 64,000,000 | |
| Less: Cost of sales | (42,400,000) | |
| Gross profit | 21,600,000 | |
| Other incomes: | ||
| Gain on disposal of property | 280,000 | |
| Dividend income | 800,000 | |
| Sundry income | 450,000 | |
| Interest income | 420,000 | |
| Total income | 23,550,000 | |
| Expenditure: | ||
| Preliminary expenses | 1,540,000 | |
| General insurance | 424,600 | |
| Legal costs | 820,000 | |
| Medical expenses | 36,200 | |
| Donations | 980,000 | |
| General provision for bad debts | 360,000 | |
| Household expenses | 845,000 | |
| Depreciation | 148,200 | |
| Salaries and wages | 1,560,000 | |
| Miscellaneous expenses | 236,000 | |
| Advertising expense | 192,400 | (7,142,400) |
| Net profit | 16,407,600 |
| 1 | Dividend income was received from: | |
| Sh. | ||
| Apex Ltd. (Associate company) | 240,000 Gross | |
| Jijenge Co-operative Society | 180,000 Net | |
| Tawah Ltd. Company (Uganda) | 380,000 Gross | |
| 2 | Interest income was received from: | |
| Sh. | ||
| Tenzi Sacco Ltd. | 285,000 Net | |
| Tilda Limited | 135,000 Gross |
| 3 | Donations include Sh.340,000 made to a golf club during a national golf tournament. The balance was made to an organisation involved in household poverty reduction campaigns, and it is a tax exempt organisation. |
| 4 | Inventories at each year end has consistently been undervalued by 20%. Closing inventory amounted to Sh.2,600,000 and included a photocopy machine of Sh.180,000. |
| 5 | Sundry income represents recovery of bad debts previously allowed as a deduction against taxable income of Sh.200,000 and insurance recovery on stolen cash while in transit of Sh.250,000. |
| 6 | Miscellaneous expenses comprised of tools and implements of Sh.180,000 and computer software purchased at a cost of Sh.56,000. |
| 7 | Advertising expense includes annual trade fair fee of Sh.40,000 and Sh.50,000 fee for renewing billboards advertising license. |
| 8 | Legal costs include Sh.236,000 incurred in successfully defending the company against allegations of breach of contract, Sh.180,000 in respect of renewal of trademark, and Sh.40,000 in respect of an appeal against VAT assessment by the revenue authority. |
| 9 | Sales and purchases are quoted inclusive of VAT at the rate of 16%. Purchases for the year amounted to Sh.43,600,000 while opening inventory was valued at Sh.1,400,000. |
| 10 | Medical expenses represent reimbursements to staff for medical bills paid. The medical scheme only covers senior employees. |
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