QUESTION 4 The following is an extract of the profit and loss account of Darko Ltd...

  

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QUESTION 4 The following is an extract of the profit and loss account of Darko Ltd for the year ended 31st December 2021 Gross profit Net dividend received Profit on sales of motor van Less: Operating Expenses Motor Expenses Entertainment Salaries and Wages Repairs Fines and Legal fees Training expenses Postage and Telephone Bad debt Interest expense Depreciation Advertising Financial expenses Donation and Subscription Audit fees NET PROFIT Addition information: GH 15,500 2000 140,000 6,000 210,000 97,500 43,500 690 30,000 7,480 12000 24,500 42,500 61,380 73,250 105,700 GH 940,000 17,500 957,500 854,500 103,000 1. Motor expenses include: GH¢ Purchase of new engine 89,500 Fuel and lubricant 50,500 The engine was purchased to maintain a vehicle which had a written down value of GH 200,000) 2. Entertainment of GH 6,000 was in respect of the birth day ceremony of MD's son. 3. The wages and salaries in the account is for 208 employees out of which 2 of them are fresh graduates with Degree from University of Cape coast. Each of the fresh graduates was paid GHe 8,000. 4. Fines and legal fees include: GH¢ Fines paid in respect of the company's driver over-speeding 9,500 Fine for late filling of annual returns 10,000 Collection of debts 6,000 Acquisition of new lease 5. Donation and Subscription: Trade association 2,500 Political Party (DDP) 37,000 Periodicals and journals 6. Financial expenses: GH¢ Cost of issue of shares Bank charges 18,000 GH¢ 33,750 DED 20,000 41,380 7. Bad Debt: A specific debt written off was GHé 4,000 and the rest was general provision. 8. Capital allowance claimable is GH¢ 50,000 9. Mr. Darko bought a building in 2012 for GH¢ 12,000 to expand his business operations. He spent GH¢1,500 to repair the building, this cost as been added to another asset cost. In 2016, he decided to sell the building and out of that he engaged a contractor to renovate the building so as to attract buyers. He spent GHé 1400 on the renovation. He engaged a sales agent who was able to sell the building in July, 2021 for GH 35,000 but charged commission of 10% on the sales value. You are required to calculate the chargeable income and tax liability of Darko Ltd for 2021 year of Assessment. QUESTION 4 The following is an extract of the profit and loss account of Darko Ltd for the year ended 31st December 2021 Gross profit Net dividend received Profit on sales of motor van Less: Operating Expenses Motor Expenses Entertainment Salaries and Wages Repairs Fines and Legal fees Training expenses Postage and Telephone Bad debt Interest expense Depreciation Advertising Financial expenses Donation and Subscription Audit fees NET PROFIT Addition information: GH 15,500 2000 140,000 6,000 210,000 97,500 43,500 690 30,000 7,480 12000 24,500 42,500 61,380 73,250 105,700 GH 940,000 17,500 957,500 854,500 103,000 1. Motor expenses include: GH¢ Purchase of new engine 89,500 Fuel and lubricant 50,500 The engine was purchased to maintain a vehicle which had a written down value of GH 200,000) 2. Entertainment of GH 6,000 was in respect of the birth day ceremony of MD's son. 3. The wages and salaries in the account is for 208 employees out of which 2 of them are fresh graduates with Degree from University of Cape coast. Each of the fresh graduates was paid GHe 8,000. 4. Fines and legal fees include: GH¢ Fines paid in respect of the company's driver over-speeding 9,500 Fine for late filling of annual returns 10,000 Collection of debts 6,000 Acquisition of new lease 5. Donation and Subscription: Trade association 2,500 Political Party (DDP) 37,000 Periodicals and journals 6. Financial expenses: GH¢ Cost of issue of shares Bank charges 18,000 GH¢ 33,750 DED 20,000 41,380 7. Bad Debt: A specific debt written off was GHé 4,000 and the rest was general provision. 8. Capital allowance claimable is GH¢ 50,000 9. Mr. Darko bought a building in 2012 for GH¢ 12,000 to expand his business operations. He spent GH¢1,500 to repair the building, this cost as been added to another asset cost. In 2016, he decided to sell the building and out of that he engaged a contractor to renovate the building so as to attract buyers. He spent GHé 1400 on the renovation. He engaged a sales agent who was able to sell the building in July, 2021 for GH 35,000 but charged commission of 10% on the sales value. You are required to calculate the chargeable income and tax liability of Darko Ltd for 2021 year of Assessment.

Answer rating: 100% (QA)

Chargeable income Gross Profit Operating Expenses Capital A... View the full answer