Mr. Ole Mboga is married to Pesa Mboga. Ole Mboga is a registered engineer and he...

  
 

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Mr. Ole Mboga is married to Pesa Mboga. Ole Mboga is a registered engineer and he is the proprietor of Leta Engineering Services a firm of consulting engineers. He is nevertheless fully occupied as an employee of Zeta Construction Limited. His company is therefore managed by his wife who draws Sh.50,000 per month as salary. PAYE of Sh.20,000 per month is deducted and remitted to the Commissioner. Zeta Construction Ltd. provided the following emoluments to Mr. Ole Mboga for the year ended 31 December 2020: 1. Salary of Sh.150,000 per month (PAYE deducted and paid to the Commissioner Sh.62,000 per month). 2. Housing - Free housing is provided, with water and electricity. He pays a nominal sh.10,000 per month. Water consumed was for Sh.4,800 and electricity consumed was for Sh. 18,000 during the year. 3. 1,000 ordinary shares for past years of service. Last valuation of shares was at sh.50 cach. The issued share capital is now 25,000 shares. The company paid a dividend of Sh. 10 per share on 31 December 2020. 4. Company car of 2000 ce. 5. Leave pay equal to one month's salary. Life insurance premium per cach housechold member of Sh.10,000 per annum. This covers himself, wife and son. 6. 7. Pension at 10% per month. He contributes 5% towards the same scheme. The scheme is registered. Leta Engineering Services made an assessed loss of Sh.400,000 for the year of income 2020. Mr. Ole Mboga owns property which he bought many years ago. Rent income account for the year 2020 is as follows: Sh. Sh. 300,000 Gross rent Less: Loan repayment Interest on loan Fencing Caretaker wages Insurance, rent and rates Replaced broken doors Loss to be carried forward 150,000 125,000 30,000 55,000 25,000 85,000 470.000 170,000 Required: Taxable income of Mr. Ole Mboga for the year of income 2020. Tax payable by Mr. Ole Mboga for the year of income 2020. (12 marks) (a) (b) ( 5 marks) Mr. Ole Mboga is being invited by Tana Ranching Company Limited to be their manager and reside at the farm. What will be the tax implications of this? Explain but do not compute if he takes up the offer and every thing remains unchanged other than the residence. (c) ( 3 marks) (Total: 20 marks) Question Two Maina, Njoka and Otieno are in partnership sharing profits and losses in the ratio of 3:1:1 respectively. For the year ended 31 December 2020, they presented the following trading and profit and loss account. Sh. Sh. 13,000,000 Sales Cost of sales: Opening stock Purchases Closing stock Gross profit Other operating income 2,200,000 4,000,000 ENO 000 5400.000 7,600,000 400.000 8,000,00 Еxpenses Salaries and wages 2,500,000 Rent Advertisement 40,000 120,000 Transport Depreciation Interest on partners' capitals Commissions paid to partners Printing and stationery Repairs and maintenance Postage and telephone Legal fees 60,000 75,000 450,000 90,000 144,000 380,000 17,000 23,000 110,000 4.000 Insurance Gifts Net profit (4.013.000) 3.987.000 Additional information: 1. Opening stock and closing stock have each been understated by 10ns 2 Other operating income includes Sh. 50,000 related to gain on sale of furniture. 3. Salaries and wages include salaries to Maina, Njoka and Otieno of Sh. 300,000, Sh. 250,000 and Sh. 50,000 respectively for the year ended 31 December 2020. 4. Transport costs include Sh. 18,000 paid to Otieno on account of a private trip. 5. Interest on partners' capitals and commissions paid to partners are to be apportioned equally to the partners. 6. The gifts were given to the staff of the firm during the end of year party. 7. Capital allowances due to the firm for the year ended 31 December 2020 were agreed at Sh. 120,000. Required: The partnership's adjusted profit (or loss) for tax purposes for the year ended 31 December 2020. Distribution of the tasxable profit (or loss) between the partners as at 31 December 2020, (1) Mr. Ole Mboga is married to Pesa Mboga. Ole Mboga is a registered engineer and he is the proprietor of Leta Engineering Services a firm of consulting engineers. He is nevertheless fully occupied as an employee of Zeta Construction Limited. His company is therefore managed by his wife who draws Sh.50,000 per month as salary. PAYE of Sh.20,000 per month is deducted and remitted to the Commissioner. Zeta Construction Ltd. provided the following emoluments to Mr. Ole Mboga for the year ended 31 December 2020: 1. Salary of Sh.150,000 per month (PAYE deducted and paid to the Commissioner Sh.62,000 per month). 2. Housing - Free housing is provided, with water and electricity. He pays a nominal sh.10,000 per month. Water consumed was for Sh.4,800 and electricity consumed was for Sh. 18,000 during the year. 3. 1,000 ordinary shares for past years of service. Last valuation of shares was at sh.50 cach. The issued share capital is now 25,000 shares. The company paid a dividend of Sh. 10 per share on 31 December 2020. 4. Company car of 2000 ce. 5. Leave pay equal to one month's salary. Life insurance premium per cach housechold member of Sh.10,000 per annum. This covers himself, wife and son. 6. 7. Pension at 10% per month. He contributes 5% towards the same scheme. The scheme is registered. Leta Engineering Services made an assessed loss of Sh.400,000 for the year of income 2020. Mr. Ole Mboga owns property which he bought many years ago. Rent income account for the year 2020 is as follows: Sh. Sh. 300,000 Gross rent Less: Loan repayment Interest on loan Fencing Caretaker wages Insurance, rent and rates Replaced broken doors Loss to be carried forward 150,000 125,000 30,000 55,000 25,000 85,000 470.000 170,000 Required: Taxable income of Mr. Ole Mboga for the year of income 2020. Tax payable by Mr. Ole Mboga for the year of income 2020. (12 marks) (a) (b) ( 5 marks) Mr. Ole Mboga is being invited by Tana Ranching Company Limited to be their manager and reside at the farm. What will be the tax implications of this? Explain but do not compute if he takes up the offer and every thing remains unchanged other than the residence. (c) ( 3 marks) (Total: 20 marks) Question Two Maina, Njoka and Otieno are in partnership sharing profits and losses in the ratio of 3:1:1 respectively. For the year ended 31 December 2020, they presented the following trading and profit and loss account. Sh. Sh. 13,000,000 Sales Cost of sales: Opening stock Purchases Closing stock Gross profit Other operating income 2,200,000 4,000,000 ENO 000 5400.000 7,600,000 400.000 8,000,00 Еxpenses Salaries and wages 2,500,000 Rent Advertisement 40,000 120,000 Transport Depreciation Interest on partners' capitals Commissions paid to partners Printing and stationery Repairs and maintenance Postage and telephone Legal fees 60,000 75,000 450,000 90,000 144,000 380,000 17,000 23,000 110,000 4.000 Insurance Gifts Net profit (4.013.000) 3.987.000 Additional information: 1. Opening stock and closing stock have each been understated by 10ns 2 Other operating income includes Sh. 50,000 related to gain on sale of furniture. 3. Salaries and wages include salaries to Maina, Njoka and Otieno of Sh. 300,000, Sh. 250,000 and Sh. 50,000 respectively for the year ended 31 December 2020. 4. Transport costs include Sh. 18,000 paid to Otieno on account of a private trip. 5. Interest on partners' capitals and commissions paid to partners are to be apportioned equally to the partners. 6. The gifts were given to the staff of the firm during the end of year party. 7. Capital allowances due to the firm for the year ended 31 December 2020 were agreed at Sh. 120,000. Required: The partnership's adjusted profit (or loss) for tax purposes for the year ended 31 December 2020. Distribution of the tasxable profit (or loss) between the partners as at 31 December 2020, (1)

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a taxable income for 2015 2260080 b tax payable 198811 c house benefit is the 10 of ... View the full answer