Unit: Public Finance and Taxation
13 Questions| Sales Day Book |
| Date | Details | Folio | Amount (Sh.) |
| December 4 | Mwangaza Ltd. | 1002 | 650,000 |
| 7 | J. Kamau | 1003 | 520,000 |
| 14 | Hazina Enterprises (export) | 1004 | 350,000 |
| 20 | Ministry of Sports | 1005 | 170,000 |
| Total | 1,690,000 |
| Purchases Day Book |
| Date | Details | Folio | Amount (Sh.) |
| December 1 | Jawabu Enterprise | 2004 | 300,000 |
| 6 | Sonytec Ltd. (imports) | 2006 | 420,000 |
| 12 | N. Kaluma | 2007 | 200,000 |
| 27 | B. Salama | 2008 | 180,000 |
| Total | 1,100,000 |
| Dr | Cr | ||||||
| Date | Details | Cash | Bank | Date | Details | Cash | Bank |
| December | Sh. | Sh. | December | Sh. | Sh. | ||
| 5 | Sales | 960,000 | 450,000 | 2 | Salaries and wages | 1,800,000 | |
| 15 | Receipt from debtors | 800,000 | 4,200,000 | 4 | Catering expenses | 120,000 | |
| 5 | Purchases | 580,000 | 640,000 | ||||
| 7 | Furniture | 160,000 | |||||
| 9 | Electricity | 32,000 | |||||
| 14 | Photocopying | 24,000 | |||||
| 22 | Refund to customers | 176,000 | |||||
| 30 | Balance c/d | 1,004,000 | 1,874,000 | ||||
| 1,760,000 | 4,650,000 | 1,760,000 | 4,650,000 | ||||
| 1 | J. Kamauwas declared bankrupt on 18 December 2018 after having paid Sh.400,000 for the goods purchased on 7 December 2018. |
| 2 | Ten per cent of the purchase from Jawabu Enterprises were returned by the company due to poor quality. |
| 3 | Credit notes amounting to Sh.280,000 were issued to customers during the month. |
| 4 | Refund to the customers in the cashbook relates to the excess amounts paid on cash sales. |
| 5 | A purchase invoice of Sh.220,000 from Dubai Traders was omitted from the purchases daybook. |
| 6 | All the above transactions are exclusive of VAT at the standard rate of 16% |
| 1 | His basic salary was Sh.120,000 per month (PAYE Sh. 48,000 per month). |
| 2 | He was provided with lunch by the employer from 1 August 2018 of Sh.4,800 per month. |
| 3 | He was provided with a fully furnished house fitted with water and electricity. The employer paid a monthly rent of Sh.45,000. He was deducted 10% of his basic monthly salary for rent. The cost of furniture was Sh.300,000 while the monthly electricity and water bills was Sh.3,500 and Sh.2,800 respectively. |
| 4 | The company paid for him life insurance premiums of Sh.6,000 per month for each member of his household from 1 September 2018. He had included himself, his wife and their son in the insurance policy. |
| 5 | He contributed 10% of his monthly pay towards a registered pension scheme while the employer contributed 15% of his basic pay towards the same scheme. |
| 6 | He enjoyed free medical treatment under a medical scheme operated by the company for all employees. His medical expenses were assessed at Sh.150,000 during the year. |
| 7 | During the year the company paid a total of Sh.35,000 as school fees for his son studying in a County School. This amount was not included in the company's income statement during the year. |
| 8 | On 1 August 2018, the company provided him with the following: - A Land Rover which was acquired at a cost of Sh.1,800,000 with an engine capacity of 3,000сc. - A gardener and a night watchman whose monthly salaries was Sh.12,500 and Sh.15,000 respectively. |
| 9 | He invested in real estate and earned a net rental income of Sh.72,000 after deducting the following expenditure: |
| Sh. | ||
| Caretaker's wages | 120,000 | |
| Fencing | 40,000 | |
| Loan repayment | 320,000 | |
| Insurance rent and rates | 48,000 | |
| Partitions | 60,000 | |
| Capital allowances | 22,000 | |
| Gross rental withholding tax paid | 68,200 |
| 10 | He received net dividends of Sh.42,500 from Maziwa Co-operative Society during the year. |
| The cost comprised the following: | Sh. |
| Factory building | 18,750,000 |
| Office (within the factory building) | 6,250,000 |
| Reinforcement of concrete floor to affix machinery | 1,650,000 |
| Land | Land |
| Architect's fee | 2,430,000 |
| Packing bay | 99,000 |
| Electrical wiring | 1,480,000 |
| Conveyer belt | 1,200,000 |
| Lifts and escalators | 4,000,000 |
| Special shafts for lifts | 3,250,000 |
| 48,000,000 |
| 1 | Additional structures and works constructed and utilised from 1 January 2018 were as follows: |
| Sh. | ||
| - Residential house | 960,000 | |
| - Workplace nursery | 1,200,000 | |
| - Drawing and design room | 720,000 |
| 2 | To improve performance in the factory, an Oracle database that provides cloud service was installed at a cost of Sh.450,000. The computers in the drawing and design room had a Computer Aided Design (CAD) application installed at a cost of Sh.270,000. |
| 3 | A building that had been constructed at a cost of Sh.12,000,000 was leased from Jalaam Manufacturers Ltd. for five years. The annual lease rentals were agreed at Sh.2,800,000. Dalbir imported processing machinery from China at a cost of Sh.5,200,000 and installed it in the building. |
| 4 | Two warehouses were constructed at a cost of Sh.2,250,000 and utilised from 1 September 2018. |
| 5 | The following assets were purchased or constructed during the year: |
| Sh. | ||
| Furniture and fittings (including of Sh.220,000 for the workplace nursery) | 620,000 | |
| Library display fixtures (stocked with mechanical engineering volumes) | 480,000 | |
| Computers and electronic adding machines | 840.000 | |
| Motor vehicle (a second-hand BMW) | 2,300,000 | |
| Lorry (four tonnes) | 1,800,000 | |
| Tuktuk for the messenger | 180,000 | |
| Backhoe loader | 3,680,000 | |
| Additional processing machinery | 9,000,000 | |
| Mobile crane | 1,900,000 |
| Sh. | |
| Operating profit before tax and other income | 3,800,000 |
| Investment income | 849,500 |
| Leasing of electronic equipment | 50,000 |
| Rental income | 346,000 |
| 1 | Investment income comprises of the following: | ||
| Sh. | |||
| Interest income: | Post Bank (K) Ltd. | 138,000 | |
| Fixed deposit accounts with Luanda Bank | 246,500 (Net) | ||
| Savings accounts | 170,000 (Net) | ||
| 200,000 (Gross) | |||
| 95,000 (Net) | |||
| 849,500 | |||
| 2 | Rental income is arrived at after deducting the following expenses among others: |
| Sh. | ||
| Mortgage interest on property | 10,000 | |
| Purchase of water meters | 28,000 | |
| Caretaker's salary | 36,000 | |
| Replacing iron sheet roofing with the tile roofing | 120,000 | |
| Withholding tax on rental income | 60,000 |
| 3 | The following expenses were considered before arriving at the operating profit before tax and other income: |
| Sh. | ||
| Salaries and wages | 840,000 | |
| Retirement fund contribution (with Sh.80,000 to registered funds) | 150,000 | |
| Depreciation | 400,000 | |
| Bank interest | 180,000 | |
| Provision for bad debts | 10,000 | |
| Legal and professional fees | 108,000 | |
| Repairs and maintenance | 40,000 | |
| Sundry expenses | 150,000 | |
| Donations | 150,000 | |
| Compensation | 92,000 | |
| Instalment tax paid for the previous year | 900,000 | |
| Construction of the watchmen's booth at the gate | 240,000 |
| 4 | Salaries and wages comprised: Directors allowances Sh.300,000, director's watchmen salary Sh.40,000 and salaries to other staff Sh.500,000. |
| 5 | Bank interest includes that of an overdraft taken by a senior manager of Sh.40,000, on the managing director's residential house mortgage Sh.60,000 and the rest on bank loan. |
| 6 | Provision for bad debts is made up as follows: |
| Sh. | Sh. | |||
| Bad debts written off: Customers | 10,000 | Balance brought forward: 3% of accounts receivable | 8,000 | |
| Staff | 14,000 | Balance brought forward: Specific bad debts | 30,000 | |
| Balance carried down: | ||||
| 2% of accounts receivable | 9,000 | Bad debts recovered | 5,000 | |
| Specific bad debts | 20,000 | Income statement | 10,000 | |
| 53,000 | 53,000 |
| 7 | Legal and professional fees comprise: |
Collection of trade debts | Sh. 20,000 | |
| Renewal of lease (99 years) | 3,000 | |
| Accounting fee | 35,000 | |
| Auditing fee | 15,000 | |
| Tax appeal | 30,000 | |
| Staff loan collection | 5,000 | |
| 108,000 |
| Auditing fee relates to an enquiry by the Revenue Authority which revealed discrepancies that led to higher tax liability and penalties. | |
| 8 | Sundry expenses constitute staff Christmas party Sh.17,000, tax penalty for late filing Sh.3,000, school fees Sh.40,000 and other allowable expenses of Sh.90,000. School fees was for a director's son and the company agreed not to debit it in the income statement. |
| 9 | Donations were to the County Governor's political campaign kitty. |
| 10 | Compensation was to a staff member who had not been issued with safety equipment and uniform as he carried out work at a client's premise leading to him being badly injured. |
| Sh. | |||
| Salaries and wages | 280,000 | Gross profit | 2,300,000 |
| Rent, rates and taxes | 150,000 | Miscellaneous income | 150,000 |
| Office expenses | 204,000 | Discounts | 80,000 |
| Printing and stationery | 64,000 | Farming income | 132,000 |
| Instalment tax paid | 45,000 | Profit on sale of shares | 100,000 |
| Advertising | 73,000 | Interest on deposits | 120,000 |
| Interest on capital: | |||
| Teddy | 60,000 | ||
| Racheal | 70,000 | ||
| Michael | 80,000 | ||
| Michael | |||
| Commission to partners: | |||
| Teddy | 45,000 | ||
| Michael | 35,000 | ||
| Depreciation | 92,000 | ||
| Bad debts | 68,000 | ||
| General expenses | 99,000 | ||
| Donation to famine relief | 100,000 | ||
| General reserve | 120,000 | ||
| Local taxes on property | 12,000 | ||
| Electricity | 46,000 | ||
| Showroom expenses | 117,000 | ||
| Net profit | 1,040,000 | ||
| 2,882,000 | 2,882,000 | ||
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