TUTORIAL CHAPTER 8

QUESTION 1

Amirudin operates a mini market under the name of Amirudin Mini Market in Taiping, Perak. The
following is the Trading Profit and Loss account for the year ended 31 December 2021:

Particulars Note RM RM
Sales 250,000
Less: Cost of sale 1 110,000
Gross Profit 140,000
Add: Other income
Net dividend 2 5,000
Gain on disposal of fixed assets 6,000 11,000
151,000
Less: Expenses
Salary, bonus, EPF 3 48,300
Travelling expenses 4 11,000
Rental Expense 5 4,000
License expenses 6 800
General Expenses 7 3,630
Repair expenses 8 4,000
Depreciation 6,000
Utilities expenses 9 1,500
Bad debts 10 2,150
Medical expenses 11 730 82,110
Net Profit 68,890

Notes to the account:

1. Included in the cost of sales is goods costing RM2,000 (market value of RM3,500) which
Amirudin took for personal use. No records were made for this transaction.
2. Dividend received from Koperasi Penjaja Kecil Taiping.
3. Salary, bonus and EPF are as follows:-

Salary & Bonus (RM) EPF (RM)

Amirudin 26,100 2,900
Disabled employee 7,000 1,600
Normal employee 8,900 1,800

4. 40% is for Amirudin personal traveling expenses and the remaining balance is the business
traveling expenses.
5. Amirudin and his family occupied the top floor of the two-storey shop lot.
6. License expenses consist of :
RM
Renewing business license 250
Renewing Amirudin’s driving license 500
Wife’s business license 50

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 7. General expenses consist of :
RM

Donation to a political party 250

Business sundry expenses 2,700
Annual subscription to a Mini Market 500
Association
Traffic summons committed by an employee 180
while on duty

8. Repair expenses consist of:-

RM

Repairs of van (for business) 2,000

Repairs of toilet on top floor 1,400
Repainting of office block 1,600

9. Only one-third of the utilities expenses is used for the business

10. Bad debts consist of:-

RM

Specific provision for bad debt 1 ,280

General provision for bad debt 1,100
Trade bad debt written off 1,350
Loan to a friend 1,420

11. Medical expenses consist of:-

RM

Medical expenses for employees 220

Medical expenses for Amirudin 110
Purchase of wheelchair for the disabled employee 400

12. Capital allowance brought forward from basis year 2020 was RM 520. For the current year,
capital allowance claimed was RM 6,700, and balancing charge and balancing allowance on the
disposal of the fixed assets were RM 2,800 and RM 3,900 respectively.

Required : Compute the statutory business income of Amirudin for the year of assessment 2021.

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QUESTION 2

Encik Aqil, an architect owns a trading company, Bonanza Ware at Putrajaya. The following is the
Statement of Comprehensive Income for Bonanza Ware for the year ended 31 December 2021.

Bonanza Ware Sdn Bhd

Statement of Comprehensive Income for the year ended 31 December 2021
Note RM RM

Sales 1,020,000
Less: Cost of goods sold 1 (400,000)
Gross Profit 620,000

Add: Other Income

Dividend 22,500
Interest on investment at BIMB 15,200
Gain on disposal of Fixed Asset 12,000
669,700
Less: Operating Expenses
Medical Expenses 2 (6,400)
Remuneration & EPF 3 (106,660)
Entertainment 4 (13,420)
Fine and Penalty 5 (750)
Fees and Donation 6 (27,800)
Office Rental 7 (24,000)
Repair and Maintenance 8 (8,120)
Telephone 9 (4,800)
Water and Electricity 10 (3,600)
Bad Debts 11 (14,900)
Depreciation (34,178) (244,628)
Profit before tax 455,072

Note

1. Cost of goods sold

Included in the cost of goods sold was RM5,300 worth of goods taken by Encik Aqil for his own
purpose and no record has been made. The market value of these goods was RM7,200.

2. Medical expenses:
Aqil wife RM 1,200
Employees RM 5,200

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 3. Remuneration

Salary & bonus EPF

Encik Aqil RM56,000 RM6,160

Employees RM26,400 RM5,000
Disable Employees RM11,100 RM2,000

4. Entertainment

Family Gathering (Encik Aqil’s family) RM 4,450

Entertaining Potential Clients RM 5,000
Annual Dinner for Staff RM 3,970

5. Fine and Penalty

Parking penalty for company car RM 500

Late payment penalty for income tax RM 250

6. Fees and donation comprises:

Cash donation to Rumah Anak Yatim Perkasa RM 12,000

Entrance fee to trade association RM 4,200
Trade association annual fee RM 6,600
Business zakat RM 5,000

7. The business operates in a rented double-storey shop house. Encik Aqil son occupied the second
floor. It has agreed by IRB that one third (1/3) of the total rental paid was for second floor.

8. Repair and Maintenance

Installation of moveable partition for the office RM 4,870

Repairs of business photocopy machine RM 3,250

9. Telephone
It was agreed by IRB that telephone expenses was used for business purposes

10. Water and Electricity

It was agreed by IRB that three quarter (3/4) of the above expenses is for business purposes

11. Bad debts

Trade debtors RM 3,500
General Provision RM 1,500
Specific Provision RM 1,900
Loan granted to ex-employee RM 8,000

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 12. Balancing Charges and Allowances
Balancing charges RM6,500
Capital allowances brought forward from previous year RM5,000
Current year allowances:
Initial allowance RM 2,500
Annual allowance RM4,500

Required:

Compute the statutory business income for Encik Aqil for the year of assessment 2021. (Show all
workings)

QUESTION 3

Fatini owns a business named Giyomi Enterprise which sells Korean apparels in Wangsa Maju. The
following is the Statement of Comprehensive Income for the year ended 31 December 2021:

RM RM
Sales 333,000
Less : Cost of sales 134,566
Gross profit 198,434

Add: other income 1 95,800 294,234

Less : Expenses
Salary, bonus and EPF 2 107,082
Finance charge 3 8,700
Bad debts 4 13,210
Entertainment 5 6,110
Repairs and maintenance 6 7,700
Zakat and taxes 7 7,987
Medical expenses 8 1,910
Donation and fees 9 3,250
Depreciation 23,000 178,949
Net profit 54,780

Notes to the accounts :

1. Others income consist of:

Interest received from money deposited in HSBC Bank RM4,200
Insurance compensation on loss of trading stock RM88,000
Rental of a kiosk from LULU Bhd RM3,600

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2. Salary, bonus and EPF consists of the following :
Salary Bonus EPF
RM RM RM
Fatini 36,000 30,000 7,260
Reen & Suzy 16,800 2,800 2,548
Ummi (disabled) 8,400 1,400 1,874

3. Finance charge consists of interest on loan taken for buying initial public offering (IPO) in Maestro
Bhd amounted to RM5,500. The balance RM3,200 is interest charges on loan made to renovate the
business premise.

4. Trade debts written off were RM7,210 and the balance is general provisions for bad debts.

5. Entertainment expenses comprise of:

Leave passage (involve Fatini and her three staff) RM4,500
Meals provided to the Alliance banker RM120
Birthday gifts to employees RM300
Dinner for staff RM500
Provision of accommodation to Fatini’s family RM690

6. Repairs and maintenance expenses comprise of:

Replacement of the business premise door due to brokerage RM3,400
Rewiring of the electrical system RM2,500
Repainting the premise walls RM1,800

7. Zakat and taxes are as follow:

Business zakat RM4,320
Owner’s income tax RM1,765
Road tax for van used in the business RM622
Road tax for Fatini personal car RM980
Legal fees on tax appeal RM300

8. Medical expenses paid to Klinik Bahagia for treatment received by Ummi amounted to RM110 and
medical insurances paid to MAA Takaful for Fatini amounted to RM1,800.

9. Donation and fees consists of:

Entrance fees to trade association RM1,550

Donation to approve institution (clothes) RM400
Cash contribution to Rumah Anak Yatim (approved) RM1,300

10. Capital allowance for year of assessment 2021 was RM37,753 and balancing charge was RM781.

Required:

Starting with net profit before tax, compute the statutory business income of Fatini for the year of
assessment 2021. (Indicate 'nil' or '-' in the appropriate column for any item/s that does not require any
adjustment).

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