Unit: Public Finance and Taxation
15 Questions| Sh. | |
| Purchases at standard rate | 487,200 |
| Audit fees | 41,760 |
| Exports to Malawi | 400,000 |
| Sales at standard rate | 1,136,800 |
| Purchases of printing materials | 29,000 |
| Fuel for delivery van | 78,880 |
| Exempt supplies | 280,000 |
| Catering for firm employees | 81,200 |
| Entertainment expenses | 24,360 |
| Telephone expenses | 58,000 |
| Payment of water bill | 21,000 |
| 1 | Her employment contract indicated the following: |
| Sh. | ||
| Basic monthly salary | 250,000 | |
| Monthly hardship allowance | 45,000 | |
| Monthly responsibility allowance | 50,000 | |
| Monthly commuter allowance | 25,000 |
| 2 | During the year, she received Sh.90,000 as a bonus for the previous years' reported profits. |
| 3 | She made a donation of Sh.50,000 to the National Kidney Fund during the year. |
| 4 | She was provided with a fully furnished apartment by the employer. The employer paid a monthly rent of Sh.80,000 and the cost of furniture was Sh.320,000. |
| 5 | The employer paid her monthly medical insurance premiums of Sh.5,000 during the year. |
| 6 | PAYE deducted from her monthly salary was Sh.68,000. |
| 7 | The company provided her with a 2,500cc saloon car on 1 October 2018 for official and private use. The car had been purchased for Sh.1,800,000. |
| 8 | She contributed Sh.15,000 per month towards a registered pension scheme. |
| 9 | She obtained a mortgage loan for the purpose of constructing her residential house from the National Savings Bank. The loan amount was Sh.4,000,000 with a monthly repayment of Sh.232,000. During the year, the total interest paid on the loan was Sh.144,000. |
| 10 | The company has a medical scheme for its managers. She was reimbursed Sh.380,000 during the year respect of medical bills. |
| 11 | During the year, she was voted as the best employee and the company rewarded her with a cash of Sh.60,000. |
| 12 | The company paid her son's college fees amounting to Sh.120,000 during the year. This amount was treated as an allowable expense in the company's books of account. |
| Income: | Sh. | Sh. |
| Gross profit | 6,290,000 | |
| Dividends (net) | 675,000 | |
| Foreign exchange gain | 175,000 | |
| Rent received (commercial building) | 580,000 | |
| Interest received from Fahari Bank Ltd. (net) | 289,000 | |
| Bad debts recovered | 370,000 | |
| Insurance claim | 785,000 | |
| Profit on sale of equipment | 88,000 | |
| Sale of debentures | 4,200,000 | 7,162,000 |
| 13,452,000 | ||
| Less expenses: | ||
| Salaries and wages | 1,450,000 | |
| Increase in provision for bad and doubtful debts | 145,000 | |
| Contribution to N.S.S.F. | 78,000 | |
| Advertising | 710,000 | |
| Stationery | 400,000 | |
| Depreciation | 280,000 | |
| Subscriptions | 1,140,000 | |
| Trading loss | 390,000 | |
| Interest | 760,000 | |
| Transport | 150,000 | |
| Legal costs | 365,000 | (5,868,000) |
| 7,584,000 |
| 1 | Dividends comprise: | Sh. | Sh. |
| Dividends from Beta Ltd. | 505,000 | ||
| Dividends from Bona Cooperative Society | 170,000 | ||
| 2 | Foreign exchange gain comprise: | ||
| Amount of realised foreign exchange gain | 125,000 | ||
| Amount of unrealised foreign exchange gain | 50,000 | ||
| 3 | Bad debts recovered related to: | ||
| Bad debts on sale of furniture | 130,000 | ||
| Bad debts on credit sale of goods | 240,000 | ||
| 4 | Insurance claim related to: | ||
| Insurance compensation on loss of profit | 380,000 | ||
| Insurance claim on loss of motor vehicle | 405,000 | ||
| 5 | Advertising comprise: | ||
| Advertising through daily newspapers | 280,000 | ||
| Advertising on passenger sheds at bus stops | 230,000 | ||
| 6 | Subscriptions related to: | ||
| Annual subscription fee to chamber of commerce and industry | 530,000 | ||
| Subscriptions to employees' sports club | 610,000 | ||
| 7 | Interest comprise: | ||
| Interest on debentures | 580,000 | ||
| Interest on loan acquired to build commercial rental houses | 110,000 | ||
| Interest on money borrowed to pay tax and penalties | 70,000 | ||
| 8 | Legal costs comprise: | ||
| Appeal to tax tribunal | 155,000 | ||
| Defending business property rights | 120,000 | ||
| Registration of lease agreement (100 years) | 90,000 | ||
| 9 | Capital allowances were agreed with the commissioner of revenue authority at Sh.960,000. |
| Sh. | |
| Factory building | 5,200,000 |
| Processing machinery | 2,400,000 |
| Furniture and fittings | 980,000 |
| Godown | 1,800,000 |
| Water pump | 360,000 |
| Motor vehicle (saloon) | 1,600,000 |
| Computers | 450,000 |
| Drainage system | 320,000 |
| Staff canteen | 960,000 |
| 1 | On 1 May 2018, the company imported a forklift for Sh.1,200,000 before VAT at the rate of 16% and import duty at 25% |
| 2 | A sports pavilion was constructed and utilised with effect from 1 October 2018. The total construction cost was sh 650,000 |
| 3 | A borehole was drilled at a cost of Sh.680,000 and utilised with effect from 1 November 2018. |
| 4 | On 2 December 2018, the company acquired the following additional assets: |
| Sh. | ||
| Photocopier | 180,000 | |
| Pick-up | 1,900,000 | |
| Cash registers | 120,000 | |
| Conveyor belts | 780,000 | |
| Fax machine | 200,000 | |
| Office cabinets (wooden) | 160,000 | |
| Boilers | 920,000 |
| 5 | The saloon car was disposed of for Sh.1,200,000 in October 2018 and replaced with a delivery van costing Sh.1,500,000. |
| 6 | Labour quarters were constructed at a cost of Sh.2,600,000 and the employees moved in the houses on 1 October 2018. |
| Income: | Sh. | Sh. |
| Sale of fruits | 1,050,000 | |
| Sale of livestock | 1,550,000 | |
| Profit on sale of tractor | 45,000 | |
| Sale of milk | 480,000 | |
| Insurance claim | 510,000 | |
| Discount received | 80,000 | |
| Sale of manure | 170,000 | |
| Interest received | 90,000 | |
| Rental income | 200,000 | |
| 4,175,000 | ||
| Less expenses: | ||
| Salaries | 540,000 | |
| Transport | 70,000 | |
| Drawings: Soi | 350,000 | |
| Timothy | 460,000 | |
| Fertilizers | 510,000 | |
| Construction of gabion | 120,000 | |
| Purchase of milking machine | 200,000 | |
| Subscriptions to agricultural research institute | 155,000 | |
| Interest | 480,000 | |
| Mulching | 60,000 | |
| Fuel | 140,000 | |
| Rates | 30,000 | |
| Presumptive tax | 45,000 | |
| Legal costs | 80,000 | |
| Wages | 620,000 | |
| Clearing land for planting fruits | 210,000 | |
| Depreciation | 15,000 | |
| Repairs and maintenance | 54,000 | (4,139,000) |
| 36,000 |
| 1 | Sale of fruits and sale of milk include own consumption of Sh.30,000 and Sh.50,000 for Soi and Timothy respectively. |
| 2 | Interest received relates to interest earned from Kenya Post Office Savings Bank (Postbank). |
| 3 | Insurance claim is in connection with a partial destruction of the farm house. |
| 4 | Salaries relate to salaries paid to partners as follows: Sh. Soi. 240,000 Timothy 300,000 |
| 5 | Rates relate to the rental income from commercial building. |
| 6 | Interest expense include interest on capital to partners as follows: Sh. Soi 105,000 Timothy 125,000 |
| 7 | Legal costs related to: |
| Sh. | ||
| Tax appeal | 35,000 | |
| Recovery of bad debts | 22,000 | |
| Defending Soi for breach of contract | 23,000 |
| 8 | The following farm works were constructed and put to use on 1 July 2018: Sh. Silo 40,000 Irrigation network 75,000 Cattle dip 150,000 |
| 9 | Interest on drawings was charged at the rate of 10%. |
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