3*** The management of Matunda Matamu Limited has presented the following trading and profit and loss account for the year ended 31 December 2019: Ksh. '000 Ksh. .000 Sales 18.500 Less cost of sales: Opening Stock 4.200 Purchases 5,600 Cost of goods available for sale 9,800 Closing stock (2,400) (7,400) Gross profit 11,100 Other incomes: Gain on sale of equipment 120 Interest on savings account (gross) 40 Divided for a quoted company 80 Gain on foreign exchange transactions 100 11,440 Expenditure: Goodwill amortization 25 Legal expenses 420 Salaries 2.000 Bad debts 500 NSSF contribution 60 General expenses 600 Advertising 300 Staff meals 190 Travelling expenses 180 Donations to a trade association 40 Property rates 45 Depreciation 150 Interest on long term 300 Interest on bank overdraft 80 Insurance premiums 124 Cost of stolen stock 20 Provision for bad and doubtful debts 200 Branch closure costs 100 (5,334) Net profit 6,106 1. The closing stock on 31 December 2019 was valued at a cost plus a mark up of twenty per cent. Legal expenses related to: Ksh. Preparation of the Memorandum of Association 150,000 Conveyance fees on purchase of land 60,000 Renewal of 89 years lease 90,000 Settling customer disputes 100,000
Acquisition of a bank loan 20,000 420,000 2. Sales (expense) includes: Ksh. Directors allowances Christmas gifts to stall Golden handshake to a retiring director 720,000 600,000 400,000 3. Bad debts include: Loan to director Estimated defaults by trade debtors 200.000 120,000 4. Advertising expense includes Ksh. 100,000 for a neon sign 5. Twenty per cent of the travelling expenses relate to the private usage of company motor vehicles. 6. Capital allowances were agreed with the revenue authority at Ksh.200,000. a. Adjusted taxable profit or loss for Matunda Matamu Limited for the year ended 31 December 2019. b. The tax payable by Matunda Matamu Limited (if any) for the year ended 31 December 2019 c. Determine the dates when tax computed in (b) above is payable given that the taxable profits for the year ended 31 December 2018 was sh.3,200,000