Unit: Public Finance and Taxation
14 Questions| 1 | Basic salary of Sh.160.000 per month (PAYE Sh.42,000 per month). |
| 2 | He was provided with a 2200ce Land Rover which had cost the company Sh.4,600,000 in the year 2010. |
| 3 | In the month of December 2015. he received a sitting allowance of Sh.280.000. |
| 4 | He is a member of a registered retirement benefits scheme of which he makes monthly contributions of Sh.30,000. |
| 5 | He was housed by the company in a rented house with water, telephone and electricity. The house had a market rental value of Sh.64.000 per month and he paid a nominal rent of Sh.25,000 per month. |
| 6 | During the year, the company paid school fees for his son amounting to Sh.280.000. This amount was disallowed for tax purposes on Geo-Sat Solution Ltd. |
| 7 | Geo-Sat Solution Ltd. operates a medical scheme for all staff with Afya Insurance Ltd. In the year 2015, the amount paid for Moses Bundi's cover amounted to Sh.320,000. |
| 8 | The company paid his monthly electricity, water and telephone bills averaging to Sh.18.000, Sh.12,500 and Sh.16,000 respectively. |
| 9 | He earned interest income of Sh.180.000 during the year from his investments in Housing Development Bonds. |
| 10 | The company paid Sh.240,000 to cover for Moses Bundi's family life insurance premiums during the year. The insurance policy covered Moses Bundi, his wife and son. |
| 11 | In December 2015. Moses Bundi received an entertainment allowance of Sh.120,000. Half of this amount was spent on entertaining customers. |
| 12 | Moses Bundi received a net rental income of Sh.1,800.000 from his commercial rental premises during the year. This was after deducting the following expenses: Sh. Caretaker's wages 620,000 Building an extension 840,000 Interest on mortgage 120,000 Fixing metallic doors 320,000 Purchase of a water tank 150,000 |
| Sh. | |
| Cost of land | 1,600,000 |
| Furniture and fittings | 250,000 |
| Factory building | 4,200.000 |
| Packing machine | 960,000 |
| Digital weighing scale | 60,000 |
| Processing machine | 540,000 |
| Tractor | 2,400,000 |
| Computers | 620,000 |
| Mobile phones | 140,000 |
| Combined harvester | 1,800,000 |
| 1 | The company constructed the following structures during the year which were utilised from 1 September 2015: |
| Cost of construction (Sh.) | ||
| Sports pavilion | 624,000 | |
| Labour quarters | 1,200,000 | |
| Recreation facility | 480,000 | |
| Factory extension | 960,000 |
| 2 | The company disposed of two computers at Sh.30,000 each on 1 August 2015. |
| 3 | The cost of processing machines includes the installation cost of Sh.120,000. |
| Sh. | Sh. | |
| Sales (inclusive of VAT at the rate of 16%) | 9,280,000 | |
| Capital gain on sale of property | 290,000 | |
| Rental income | 240,000 | |
| Dividends from Waki Cooperative (net) | 170,000 | |
| Unrealised foreign exchange gain | 94,000 | |
| 10,074,000 | ||
| Less expenses: | ||
| Cost of goods sold | 4,000,000 | |
| Purchase of computers | 160,000 | |
| Salaries and wages | 360,000 | |
| General expenses | 720,000 | |
| Legal expenses | 940,000 | |
| Conveyance fees | 92,800 | |
| Farmworks at cost | 60,000 | |
| Repairs and maintenance | 24,500 | |
| Interest on partners capital | 450,000 | |
| Mambo's mortgage interest | 65,800 | |
| Donations to Tennis club | 34,800 | |
| Commission to Kaka | 21,100 | (6,929,000) |
| Net profit | 3,145,000 |
| 1 | General expenses include: | Sh. |
| o Embezzlement by Kaka | 24,000 | |
| o Partition of staff offices | 48,000 | |
| o Staff catering expenses | 50,000 | |
| o Pension contributions | 180,000 | |
| o Prepaid rent and rates | 32,400 | |
| o Stamp duty on land transfer | 64,000 | |
| 2 | Legal expenses include: | |
| o Drafting a partnership deed | 42,000 | |
| o Negotiating a bank loan | 28,400 | |
| o Executing a customs bond security | 24,600 | |
| o Defending the business against breach of contract | 38,000 |
| 3 | Salaries to partners and interest on partners capital is to be shared according to the profit and loss sharing ratio. |
| 4 | Salaries and wages include salaries to employees of Sh.160,000 while the balance was paid to partners. |
| 5 | Cost of goods sold include purchases valued at Sh.300,000 which had been overstated by 20%. |
Want to join the discussion?
Log in to post comments and interact with tutors.
Login to Comment