Demolley Investment Ltd a private company prepares its accounts at 31st December each year and has prepared
Question:
Demolley Investment Ltd a private company prepares its accounts at 31st December each year and has prepared the following Profit and Loss Account for the year 2014.
General administrative expenses 70,000
Director’s fees and expenses 10,000
Repairs and renewals 24,000
Subscriptions and donations 4,000
Bad Debts 16,000
Preliminary expenses 6,000
Retirement benefit 100,000
Rent, rates and insurance 60,000
Patents written off 5,000
Legal and accountancy 83,000
Interest on overdue tax 5,000
Interest in lieu of dividends 10,000
Depreciation 20,000
Net profit before taxation 222,000
Gross profit b/d 560,000
Bad debts previously Written off 2,000
Dividends (Gross) 10,000
Post office savings
Bank interest 3,000
Notes:
Repairs and Renewals: Shs
Redecoration of an existing business 6,000
Renovation to new building 10,000
Partition and carpeting of old building to
Create extra office for Personnel Manager 8,000
Subscription and donations:
National Chamber of Commerce and Industry 2,000
Kenya Red Cross Society 1,000
Sporting facilities for Staff 1,000
Bad Debts:
This is on account of a loan given to a supplier and who was adjudged a bankrupt during the year.
Preliminary expenses: Shs
Balance of stamp duty on issue of share
Capital 4,000
Secretarial Services fees now written off 2,000
Retirement Benefits:
N.S.S.F contribution 10,000
Pension to Management Staff 80,000
Contribution to approved Provided Fund 10,000
Legal and Accountancy:
Staff Services Agreement 4,000
Contract for purchase of a new business 11,000
Audit fee 60,000
Income Tax – Appeal to Local Committee 4,000
Lease preparation (5 Year lease) 4,000
Interest in lieu of dividends
The company did not pay dividends in 2012 but instead decided to pay interest at 10% on the share issued and fully paid.
Dividends:
These were from a subsidiary company where ABC Limited holds 75% of the issued share capital.
Required:
Compute corporation tax liability for 2013. Ignore wear and tear deductions and State the dates when such tax would be paid.
Expert Answer:
To compute the corporation tax liability for 2013 we need to calculate the taxable profit and then a... View the full answer
