Mmapula (Pvt) Ltd is an approved manufacturing company running a business in Botswana as a
manufacturer of cosmetic products. The following information is furnished in respect of its
business activities for the year of assessment ended 31 December 2020.
Income Statement for the year ended 31 December 2020.
Amount (P) Amount (P)
Sales 3 300 000
Less: Cost of Sales (900 000)
Gross Profit 2 400 000
Less: Expenses:
Bad and Doubtful Debts 120 000
Research and Experiments 80 000
Voluntary Pensions 150 000
Depreciation 110 000
Travelling Expenses 60 000
Provision for obsolescence 20 000
Audit fees 12 000
Income tax advice 16 000
Entertainment for customers 28 000
Interest paid 52 000
Donations 300 000
General Expenses 520 000
Approved Training Expenses 90 000
Transfer to Capital Reserve 50 000
Transfer to General Reserve 60 000
(1 668 000)
Retained Profit for the Year 732 000
Additional Information: P
1. Bad and doubtful debts are made up of the following:
Debts proved to be irrecoverable 90,000
Provision for doubtful debts based on 10 % of debtors 30,000
2. Research and experiments related to the company’s products.
3. Voluntary pensions are payments to:
Alexio- a former employee who retired due to old age 140,000
Mary-widow of a former employee 10,000
4. Travelling expenses include:
Business trip 40,000
Private trip by Managing Director 20,000
5. Donations include:
Manufacturers’ Association 160,000
Political Parties 40,000
Gaborone Technical College for research 100,000
6. General expenses
Loans to employees written off 80,000
Fire Insurance 20,000
Lease Premiums 120,000
Donation to sports associations 300,000
7. The company’s assets at the beginning of 2020 were as follows: Cost
Motor Vehicles (trucks)-Purchase in June 2013 200,000
Furniture & Fittings -Purchased in March 2012 100,000
Tractors- Purchased in May 2014 120,000
Plant & Machinery- Purchased in January 2011 240,000
Factory Building Constructed in February 2011 800,000
Additions to assets during the year:
Machinery 240,000
Delivery truck 20,000
New Office Furniture 40,000
Extension to Factory building 200,000

Required:
Compute the company’s chargeable income or assessed loss for the year ended 31 December
2020 including the tax payable for the year, if any.

Answer rating: 100% (QA)

Chargeable income for the year ended 31 December 2020 Sales 3 300 ... View the full answer