Answer ALL questions. FunkyClothing Ltd are a UK registered company who design and produce sustainable clothing...

 

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Answer ALL questions. FunkyClothing Ltd are a UK registered company who design and produce sustainable clothing for the fashion market. Their clothing sells both online and in high-street retail outlets. The following information is available regarding the year ended 31 March 2020. Shares and securities transactions During the year FunkyClothing Ltd had the following acquisitions and disposals of shares: 28 October 2019 30 October 2019 30 October 2019 Acquired 4,000 shares at a cost of £6.25 each Acquired 3,000 shares at a cost of £6.50 each Disposed 12,000 shares for £174,000 (£14.50 each) The following prior transactions are relevant: As at 1 April 1985 - No. of shares 5,500; cost £7,500; indexed cost £9,500 Acquired 1,000 shares at a cost of £2,500 Acquired 3,000 shares at a cost of £8,000 Acquired 800 shares at a cost of £5,000 10 December 1985 30 August 1992 1 May 2000 The relevant retail prices index (RPIS) for the share holdings are: April 1985 December 1985 August 1992 May 2000 December 2017 94.78 96.05 138.9 170.7 278.1 Trading profits information The accounting profits for the year ended 31 March 2020 are £1,950,000. The accounts include the following income and expenses: Interest received 25,000 65,000 5,000 Dividends received Interest paid on an overdraft on a business current account Depreciation Speeding fine Parking ticket 10,000 1,000 300 6,000 7,000 Charitable donation Entertainment FunkyClothing Ltd has trading losses brought forward from earlier years of £25,000. Capital Allowances Information During the year FunkyClothing Ltd acquired and disposed of the following items: 01/05/2019 Equipment addition £300,000 10/06/2019 Equipment disposal £70,000; originally cost £60,000 20/06/2019 Equipment addition £200,000 30/08/2019 Equipment disposal £20,000; originally cost £50,000 02/10/2019 Plant & Machinery addition £180,000 20/11/2019 Plant & Machinery addition £120,000 31/12/2019 Equipment addition £250,000 31/01/2020 Equipment disposal £30,000; originally cost £100,000 02/02/2020 Plant & Machinery addition £150,000 20/03/2020 Plant & Machinery disposal £40,000; originally cost £25,000 Income from property information FunkyClothing Ltd lets out two warehouses that are surplus to requirements. The first warehouse was let from 1 April 2019 until 28 February 2020 at a monthly rent of £3,500. On that date the tenant left, owing 2 months' rent which FunkyClothing Ltd were not able to recover. Another tenant was not found until September 2020. The second warehouse was let for the whole year at a rent of £5,500 per month. Insurance costs for the warehouses totalled £6,500. Interest paid on loans secured on the warehouses totalled £8,500. During the year a surplus property was disposed of for £250,000. The incidental costs of disposal were £1,000, the original unindexed cost was £85,000, and the indexed cost was £125,000. Required: (a) Calculate FunkyClothing Ltd's net chargeable gains for the year. (12 marks) (b) Calculate FunkyClothing Ltd's Corporation Tax liability for the year. (15 marks) (c) When is FunkyClothing Ltd required to pay its Corporation Tax liability and submit its Corporation Tax return for this accounting period? (1 mark) (d) Describe the main differences in the way trading profits are calculated for a limited company compared with a sole trader. (2 marks) Answer ALL questions. FunkyClothing Ltd are a UK registered company who design and produce sustainable clothing for the fashion market. Their clothing sells both online and in high-street retail outlets. The following information is available regarding the year ended 31 March 2020. Shares and securities transactions During the year FunkyClothing Ltd had the following acquisitions and disposals of shares: 28 October 2019 30 October 2019 30 October 2019 Acquired 4,000 shares at a cost of £6.25 each Acquired 3,000 shares at a cost of £6.50 each Disposed 12,000 shares for £174,000 (£14.50 each) The following prior transactions are relevant: As at 1 April 1985 - No. of shares 5,500; cost £7,500; indexed cost £9,500 Acquired 1,000 shares at a cost of £2,500 Acquired 3,000 shares at a cost of £8,000 Acquired 800 shares at a cost of £5,000 10 December 1985 30 August 1992 1 May 2000 The relevant retail prices index (RPIS) for the share holdings are: April 1985 December 1985 August 1992 May 2000 December 2017 94.78 96.05 138.9 170.7 278.1 Trading profits information The accounting profits for the year ended 31 March 2020 are £1,950,000. The accounts include the following income and expenses: Interest received 25,000 65,000 5,000 Dividends received Interest paid on an overdraft on a business current account Depreciation Speeding fine Parking ticket 10,000 1,000 300 6,000 7,000 Charitable donation Entertainment FunkyClothing Ltd has trading losses brought forward from earlier years of £25,000. Capital Allowances Information During the year FunkyClothing Ltd acquired and disposed of the following items: 01/05/2019 Equipment addition £300,000 10/06/2019 Equipment disposal £70,000; originally cost £60,000 20/06/2019 Equipment addition £200,000 30/08/2019 Equipment disposal £20,000; originally cost £50,000 02/10/2019 Plant & Machinery addition £180,000 20/11/2019 Plant & Machinery addition £120,000 31/12/2019 Equipment addition £250,000 31/01/2020 Equipment disposal £30,000; originally cost £100,000 02/02/2020 Plant & Machinery addition £150,000 20/03/2020 Plant & Machinery disposal £40,000; originally cost £25,000 Income from property information FunkyClothing Ltd lets out two warehouses that are surplus to requirements. The first warehouse was let from 1 April 2019 until 28 February 2020 at a monthly rent of £3,500. On that date the tenant left, owing 2 months' rent which FunkyClothing Ltd were not able to recover. Another tenant was not found until September 2020. The second warehouse was let for the whole year at a rent of £5,500 per month. Insurance costs for the warehouses totalled £6,500. Interest paid on loans secured on the warehouses totalled £8,500. During the year a surplus property was disposed of for £250,000. The incidental costs of disposal were £1,000, the original unindexed cost was £85,000, and the indexed cost was £125,000. Required: (a) Calculate FunkyClothing Ltd's net chargeable gains for the year. (12 marks) (b) Calculate FunkyClothing Ltd's Corporation Tax liability for the year. (15 marks) (c) When is FunkyClothing Ltd required to pay its Corporation Tax liability and submit its Corporation Tax return for this accounting period? (1 mark) (d) Describe the main differences in the way trading profits are calculated for a limited company compared with a sole trader. (2 marks)

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aFunky Clothing Lids net chargeable gains for the year are 140000 250000 1000 125000 140000 The calculation for net chargeable gains is the proceeds from the disposal of the surplus property minus the ... View the full answer