Linda's income statement for the year ended 31 March 2021 is as	follows: £	£
Sales		82,500
Less:Cost of Sales		37,200
Gross Profit		45,300
Add:Rents receivable	1,200
Bank interest receivable	80
Profit on sale of non-current asset	510	1,790
		47,090
Less: Wages and salaries	22,620
Business rates and insurance	1,750
Heating and lighting	2,170
Repairs and renewals	4,280
Telephone	880
Motor Expenses	3,250
Sundry expenses	1,650
Bad and doubtful debts	640
Credit card interest	120
Loss on sale of non-current asset	70
Depreciation	2,500	39,930
Net profit for the year		7,160

Notes:

a) Linda draws a salary of £250 per week from the business. This is included in the wages and salaries figure.

b) Repairs and renewals are as follows:

£
Decorating of business premises 380
Installation of new improved heating system 3,700

Minor repair 200
4,280

c) It has been agreed with HMRC that one-quarter of telephone costs and one-fifth of motor expenses relate to private use.

d) Sundry expenses include business entertaining of£520.

e) Trade debts written off in the year amounted to £440 and £200 has been set aside as a general allowance (or provision) for bad and doubtful debts.

Required:

Compute Linda's tax adjusted trading profit (before capital allowances) for the year ended 31 March 2021.

Answer rating: 100% (QA)

Tax adjusted trading profit for the year ended 31 Mar... View the full answer