SUNWAY COLLEGE

DIPLOMA IN ACCOUNTING
TX4014 MALAYSIAN TAXATION
TUTORIAL 4

1. Cerah Sdn. Bhd. is in the business of manufacturing household appliances since 2010. It has a
paid up capital of RM1,000,000. Its income statement for the year ended 30 June 2020 is as follows:

Note RM RM
Sales 1,959,000
Less: Cost of sales 1 696,000
1,263,000
Add: Other income 2 218,000
1,481,000
Less: expenses
Repairs and maintenance 3 125,000
Professional fees 4 58,000
Donations 5 45,000
Travelling 6 150,000
Allowance for bad debts 7 69,000
Motor vehicles 8 39,000
Entertainment 9 115,000
Salaries and allowances 10 285,000
Water and electricity 47,000
Depreciation 50,000
(983,000)
Net Profit 498,000

Notes:
RM

1. Cost of sales:
Provision for obsolete inventories included in the cost of sales 85,000

2. Other income comprises:

Interest received from fixed deposit placed at CIMB 98,000

Dividends (from a single tier company in Malaysia) 120,000

3. Repairs and maintenance include:

Renovation of office 98,000

Machine repair expenses 27,000

4. Professional fees comprise:
Accounting and audit fees 32,000

Secretarial fees 9,500

Tax return filling fees 6,500

Fine for traffic offences 10,000

5. Donations to approved institutions:

Cash donation to an orphanage 25,000

Clothes donation to an orphanage 20,000

6. Travelling:
Leave passage for five senior managers to New Zealand 89,000

Annual company trip to Tioman organised by employer 61,000

7. Allowance for bad debts comprises:

Bad debts written off (non-trade) 17,000

General provision 38,000

Specific provision 29,000

Bad debts recovered (note below) (15,000)

Note: Included in the bad debts recovered is a sum of RM10,000 in respect of a personal
loan recovered from an ex-employee.

8. Motor vehicles expenses include:

Cost of buying a lorry 39,000

9. Entertainment expenses comprise:

Beverages for clients during launching of new products 22,000

Entertainment for staff 68,000

Annual dinner for company’s staff 25,000

10. Salaries and allowances

Directors’ salaries 80,000
Staff’s salaries 205,000

11. The balancing charge and capital allowances for the year of assessment 2020 were
RM20,000 and RM45,000 respectively.
Required:

Starting with net profit before tax, compute the income tax payable for Cerah Sdn. Bhd.for the
year of assessment 2020. Indicate ‘nil’ under the appropriate column, where no tax adjustment is
required.

2. Hannah Sdn. Bhd. has been in the business of manufacturing readymade spices in Malaysia
since 1 January 2015. The statement of profit and loss accounts for the year ended 31 December
2020 is as follows:

RM’000 RM’000
Note
Sales 800
Less: cost of sales (340)
Gross Profit 460
Less: expenses
Staff salary and remuneration 1 150
Entertainment 2 20
Professional fees 3 10
Repairs and maintenance 4 16
Provision of bad debts 5 20 216
Net Profit 244

Notes

1. Included in the staff salary and remuneration is RM30,000 as Hannah’s salary.

2. Entertainment includes RM2,000 on providing free food and drinks to employees.

3. Professional fees includes the following:

Accounting fee RM2,000

Legal fee on renewal of loan RM3,000

Legal fee to collect trade debt RM5,000

4. Repair and maintenance includes RM5,000 on repairing the vans used in the business.

5. Provision of bad debts comprise:

Increase in specific provision RM6,000

Increase in general provision RM8,000

Bad debts written off RM6,000

 All debts are trade debts.

6. Capital allowance for the YA2020 is RM12,500.

Required:

Compute the statutory income of Hannah for the YA2020.