Background Alice Fabian is an entrepreneur from Belgium. She trades gourmet chocolate in the European Union....

Transcribed Image Text:

Background Alice Fabian is an entrepreneur from Belgium. She trades gourmet chocolate in the European Union. Alice arrived in Singapore on 27 January 2020 to assess market demand for her chocolates in the country. She started business as a sole proprietorship on 1 February 2020 but ended operations on 31 May 2020 due to COVID-19. Alice's Business Matters Alice was not trained in accounting. However, she was aware of the record-keeping requirements in Singapore. Hence, Alice recorded all business transactions. The statement of profit or loss for the financial period from 1 February 2020 to 31 May 2020 of Alice's sole proprietorship is presented below. Revenue Less: Cost of goods sold Gross profit Add: Other income Less: Expenses Selling and distribution expenses Administrative and other expenses Finance costs Net profit before tax Notes to statement of profit or loss Note (2) 1 2 3 4 ($) (387,287) (237,832) (32,473) (S) 934,284 (238,478) 695,806 23,493 (1) Other income included the following non-trade related income: (657,592) 61,707 Dividends issued by a Singapore tax resident company of $129; Gains derived from sale of equipment of $2,484; and Interests earned from staff loans of $987. Alice signed a sale and purchase agreement for the sale of equipment on 19 February 2020 in Singapore. She sold the equipment as they were unfit for business. Alice knew that this transaction resulted in a balancing charge of $2,484. Expenses were revenue in nature, unless otherwise stated. Activate Windows to Settings to activate (3) (4) Selling and distribution expenses included the following expenses: Delivery fees of $2,897 incurred for order fulfilment purposes; Private car reimbursements of $8,973 incurred for official business meetings; Provision for reinstatement costs of $27,000 envisaged to be incurred; Retail shop rental of $7,000 per month incurred for day-to-day operations; and . Salaries of $36,000 incurred for the employment of various employees. Alice signed a tenancy agreement for the rental of retail shop for four months with effect from 1 February 2020 on 29 January 2020 in Singapore. She offered to pay above the market rate of $6,500 per month to secure the tenancy of the retail shop. Alice used about 80% of the retail shop's floor space for her business. She used the remaining 20% of the retail shop's floor space for her personal use. Alice used this space to store her private collection of books shipped from Brussels to Singapore. Alice paid salaries to a chocolatier and a shopkeeper. She confirmed that their salaries amounted to 70% of the total salaries recorded. Alice paid herself salaries, as the retail shop's manager, with the remaining 30% of the total salaries recorded. Administrative and other expenses included the following expenses: Costs of $22,345 incurred for the purchase of new equipment; Depreciation of $745 recorded for the wear and tear of equipment; Donations of $2,000 made to institutions of a public character; Entertainment expenses of $874 charged to business account; and Legal fees of $2,480 incurred for the application of business licence. Alice purchased equipment, which qualify for capital allowances, to make gourmet chocolates for sale in her retail shop. Alice was informed to claim balancing allowances of $12,247 by the IRAS. Alice met up with her friends at various restaurants in Singapore when they visited from Belgium. She included expenses incurred therefrom, which amounted to $136, in her sole proprietorship's statement of profit or loss as entertainment expenses. Alice signed an engagement letter with Tito Isaac & Co for legal services on 28 January 2020 in Singapore. She required help with the application of business licence. Alice did not pay for the other advisory services rendered out of goodwill. Alice's Personal Matters Alice was born and bred in Brussels. She lives with her family in Belgium, apart from her occasional business and leisure travels, which are often temporary in nature. Alice keeps in touch with her ex-school mates from Brussels on a regular basis, as she has not been making new friends ever since she started her entrepreneurial endeavours. Alice deposited proceeds from her retail shop's day-to-day operations into the sole proprietorship's Singapore bank account temporarily. She remitted all cumulative proceeds back to her Belgium bank account at the end of every month, after putting aside a certain amount for her retail shop's working capital. Alice felt helpless and disappointed that she had to cease her retail shop's operations prematurely due to the pandemic outbreak in Singapore. She sought help from various avenues but to no avail. Alice left Singapore for good on 7 June 2020 to be with her family in Brussels. Background Alice Fabian is an entrepreneur from Belgium. She trades gourmet chocolate in the European Union. Alice arrived in Singapore on 27 January 2020 to assess market demand for her chocolates in the country. She started business as a sole proprietorship on 1 February 2020 but ended operations on 31 May 2020 due to COVID-19. Alice's Business Matters Alice was not trained in accounting. However, she was aware of the record-keeping requirements in Singapore. Hence, Alice recorded all business transactions. The statement of profit or loss for the financial period from 1 February 2020 to 31 May 2020 of Alice's sole proprietorship is presented below. Revenue Less: Cost of goods sold Gross profit Add: Other income Less: Expenses Selling and distribution expenses Administrative and other expenses Finance costs Net profit before tax Notes to statement of profit or loss Note (2) 1 2 3 4 ($) (387,287) (237,832) (32,473) (S) 934,284 (238,478) 695,806 23,493 (1) Other income included the following non-trade related income: (657,592) 61,707 Dividends issued by a Singapore tax resident company of $129; Gains derived from sale of equipment of $2,484; and Interests earned from staff loans of $987. Alice signed a sale and purchase agreement for the sale of equipment on 19 February 2020 in Singapore. She sold the equipment as they were unfit for business. Alice knew that this transaction resulted in a balancing charge of $2,484. Expenses were revenue in nature, unless otherwise stated. Activate Windows to Settings to activate (3) (4) Selling and distribution expenses included the following expenses: Delivery fees of $2,897 incurred for order fulfilment purposes; Private car reimbursements of $8,973 incurred for official business meetings; Provision for reinstatement costs of $27,000 envisaged to be incurred; Retail shop rental of $7,000 per month incurred for day-to-day operations; and . Salaries of $36,000 incurred for the employment of various employees. Alice signed a tenancy agreement for the rental of retail shop for four months with effect from 1 February 2020 on 29 January 2020 in Singapore. She offered to pay above the market rate of $6,500 per month to secure the tenancy of the retail shop. Alice used about 80% of the retail shop's floor space for her business. She used the remaining 20% of the retail shop's floor space for her personal use. Alice used this space to store her private collection of books shipped from Brussels to Singapore. Alice paid salaries to a chocolatier and a shopkeeper. She confirmed that their salaries amounted to 70% of the total salaries recorded. Alice paid herself salaries, as the retail shop's manager, with the remaining 30% of the total salaries recorded. Administrative and other expenses included the following expenses: Costs of $22,345 incurred for the purchase of new equipment; Depreciation of $745 recorded for the wear and tear of equipment; Donations of $2,000 made to institutions of a public character; Entertainment expenses of $874 charged to business account; and Legal fees of $2,480 incurred for the application of business licence. Alice purchased equipment, which qualify for capital allowances, to make gourmet chocolates for sale in her retail shop. Alice was informed to claim balancing allowances of $12,247 by the IRAS. Alice met up with her friends at various restaurants in Singapore when they visited from Belgium. She included expenses incurred therefrom, which amounted to $136, in her sole proprietorship's statement of profit or loss as entertainment expenses. Alice signed an engagement letter with Tito Isaac & Co for legal services on 28 January 2020 in Singapore. She required help with the application of business licence. Alice did not pay for the other advisory services rendered out of goodwill. Alice's Personal Matters Alice was born and bred in Brussels. She lives with her family in Belgium, apart from her occasional business and leisure travels, which are often temporary in nature. Alice keeps in touch with her ex-school mates from Brussels on a regular basis, as she has not been making new friends ever since she started her entrepreneurial endeavours. Alice deposited proceeds from her retail shop's day-to-day operations into the sole proprietorship's Singapore bank account temporarily. She remitted all cumulative proceeds back to her Belgium bank account at the end of every month, after putting aside a certain amount for her retail shop's working capital. Alice felt helpless and disappointed that she had to cease her retail shop's operations prematurely due to the pandemic outbreak in Singapore. She sought help from various avenues but to no avail. Alice left Singapore for good on 7 June 2020 to be with her family in Brussels.

Answer rating: 100% (QA)

Based on the information provided here is a summary of Alice Fabians business and personal matters Business Matters Alice Fabian is an entrepreneur fr... View the full answer