- 20 Marks
Question
The Income Statement of Ashie Mart Limited, a supermarket in Accra for the year ended 31st December submitted to Commissioner of Domestic Tax Revenue Division of Ghana Revenue Authority on 30th April 2016.
| GH¢ | GH¢ |
|---|---|
| Gross Operation Profit | |
| Profit on Sale of Assets | |
| Less General Administration Expenses | |
| Salaries and Wages | 540,000 |
| Rent | 30,000 |
| Insurance | 34,000 |
| Acquisition | 16,000 |
| Painting of Premise | 36,000 |
| Loans to Staff written off | 18,000 |
| Advertisement (Note 1) | 24,000 |
| Staff Welfare (Note 2) | 52,000 |
| Travelling and Transport | 40,000 |
| Donations and Subscription (Note 3) | 32,000 |
| Bad Debts (Note 4) | 19,000 |
| Depreciation | 42,000 |
| (885,300) | |
| Net Profit |
The following notes relate to the Accounts:
| Note 1 Advertisement | GH¢ |
|---|---|
| a. Cost of Neon Sign | 10,200 |
| b. Media Advert | 14,300 |
| 24,500 |
| Note 2 Staff Welfare | GH¢ |
|---|---|
| a. Refund of Staff Medical Bills | 25,000 |
| b. Safety Wear Acquired for staff | 8,600 |
| c. Canteen Equipment | 16,900 |
| 50,500 |
| Note 3 Donations and Subscriptions | GH¢ |
|---|---|
| a. Donation to the Ghana Heart Foundation | 20,000 |
| b. Goods given gratis to Customs Officials | 6,000 |
| c. Subscription to Ghana Manufactures Association | 6,000 |
| 32,000 |
| Note 4 Bad Debts | GH¢ |
|---|---|
| a. General Provision | 12,000 |
| b. Specific Provision | 7,500 |
| 19,500 |
Note 5: The Capital Allowance as agreed with the Ghana Revenue Authority for the year is GH¢ 6,500.
Note 6: The company had during the year paid a total of GH¢ 2,600.
Required:
Compute the Chargeable income and Tax liability of Ashie Mart Limited for the 2014 Year of Assessment. (20 Marks)
Answer
ASHIE MART LIMITED
COMPUTATION OF TAX LIABILITY
YEAR OF ASSESSMENT 2015
| GH¢ | GH¢ | |
|---|---|---|
| Net Profit per the Income Statement | 108,200 | |
| Add back: | ||
| Depreciation | 42,500 | |
| Cost of Neon Sign | 10,200 | |
| Canteen Equipment | 16,900 | |
| Goods given gratis to Customs Officials | 6,000 | |
| General Provision | 12,000 | |
| 87,600 | ||
| Adjusted Profit | 195,800 | |
| Less: Capital Allowance | 6,500 | |
| Chargeable income | 189,300 | |
| Tax Charged at 25% | 47,325 | |
| Less: Tax Paid | 2,600 | |
| Tax Due | 44,725 |
- Tags: Capital Allowanc, chargeable income, Tax Liability
- Level: Level 3
- Topic: Income Tax Computation
- Series: FEB 2017
- Uploader: Samuel Duah