1. The following balances are extracted from the books of Bandani Limited for the year ended...

Transcribed Image Text:

1. The following balances are extracted from the books of Bandani Limited for the year ended 30 April 2016. Share capital: 3,000,000 ordinary shares (fully paid) 800 8% redeemable preference shares Share premium account General reserves Preference share redemption Block capital (at cost less depreciation) Net profit for the year (before tax) Debtors (unsecured, considered good) Creditors. Profit and Loss Account (Cr 1 May 2015) Interim dividend Unpaid dividend Other current assets Investments Preliminary expenses 3,000,000 80,000 50,000 200,000 96,000 account. 1,910,000 842,000 60,000 50,000 20,000 150,000 18,000 1,150,000 390,000 12,000 Income tax paid, under dispute for the year ended 30 April 2015 Advance payment of income tax You are provided with the following additional information: 1. Market value of the investment is Sh.355,000. Investment which cost Sh.40,000 had been sold in the year and realized a profit of Sh.12,500 which is included in the above profits. 2. The disputed income tax of the year ended 30 April 2015 is per revised assessment. Original self-assessment indicated an amount of Sh.96,000 which had been paid. 3. Preference shares are redeemable on 1 April 2017, at a premium of 20% but no entries were recorded in the books for giving effect thereto except for the payment standing to the debit of preference share redemption account. 4. Preliminary expenses represent the balance after amortisation. The original amount incurred to pay wages before commencement of business was Sh.20,000 and is being amortised over 5 years. The amortisation charge is debited to the profit and loss account. 5. Other current assets include stocks of Sh.90,000 which had been written down by 10% as provision for future plans decline. The amount was debited to the profit and loss 200,000 440,000 Required: Compute revised taxable profits of Bandani Limited for the year ended 30 April 2016 and show tax payable. Gr 1. The following balances are extracted from the books of Bandani Limited for the year ended 30 April 2016. Share capital: 3,000,000 ordinary shares (fully paid) 800 8% redeemable preference shares Share premium account General reserves Preference share redemption Block capital (at cost less depreciation) Net profit for the year (before tax) Debtors (unsecured, considered good) Creditors. Profit and Loss Account (Cr 1 May 2015) Interim dividend Unpaid dividend Other current assets Investments Preliminary expenses 3,000,000 80,000 50,000 200,000 96,000 account. 1,910,000 842,000 60,000 50,000 20,000 150,000 18,000 1,150,000 390,000 12,000 Income tax paid, under dispute for the year ended 30 April 2015 Advance payment of income tax You are provided with the following additional information: 1. Market value of the investment is Sh.355,000. Investment which cost Sh.40,000 had been sold in the year and realized a profit of Sh.12,500 which is included in the above profits. 2. The disputed income tax of the year ended 30 April 2015 is per revised assessment. Original self-assessment indicated an amount of Sh.96,000 which had been paid. 3. Preference shares are redeemable on 1 April 2017, at a premium of 20% but no entries were recorded in the books for giving effect thereto except for the payment standing to the debit of preference share redemption account. 4. Preliminary expenses represent the balance after amortisation. The original amount incurred to pay wages before commencement of business was Sh.20,000 and is being amortised over 5 years. The amortisation charge is debited to the profit and loss account. 5. Other current assets include stocks of Sh.90,000 which had been written down by 10% as provision for future plans decline. The amount was debited to the profit and loss 200,000 440,000 Required: Compute revised taxable profits of Bandani Limited for the year ended 30 April 2016 and show tax payable. Gr

Answer rating: 100% (QA)

Bandani Limited Revised Taxable Profits For ... View the full answer