(See attached files for full problem description)
1. Calculate Susan's assessable business for the two years of assessment based on her accounts to 30 April 2002. In order to do this:
a) Compute the capital allowances for the year.
b) Calculate the adjusted profit for the year after capital allowances.
c) Calculate the Schedule D Case 1 assessable income for the first two years of assessment, (noting the overlap profit)
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 APRIL 2002
COST OF FOODS 18200
COST OF PREMISES 4500
MOTOR EXPENSES 2630
LOSS ON SALE OF FURNITURE 300
The audit manager has reviewed the file of Sunflower Catering and has noted the following information:
? The wages are all to Susan's son James who works full time as the cook of the business:
? The cost of the premises relates to a kitchen used to prepare food ;
? Motor expenses comprise fuel, insurance etc. in respect of the car used by Susan in the business. Susan's mileage during the period was as follows:
Delivering to clients 10,000
Obtaining supplies 2000
? Equipment and vehicles were bought on 01 May 2001 as follows:
Fixtures and fittings 1200
Cooking equipment 5400
Computer system 1800
Disposal of fixtures cost (1000)
Depreciation for the year (7000)
Net Book Value 13000
The fixtures were surplus to requirements and were sold in March 2002 for £700.
Calculation Of Corporate Tax, Calculation of Capital allowances, CalculationMarginal Tax Relief Available Because PCTCT, Calculation Of Corporate Profit:
INCOME AS PER PROFIT AND LOSS ACCOUNT ...
Calculation of corporate tax and capital allowances are determined. The adjusted profit for the year after capital allowances are computed.