ACY3161ass5_1112_1st%5b2%5d%28new%29

ACY3161ass5_1112_1st%5b2%5d%28new%29 - THE CHINESE...

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THE CHINESE UNIVERSITY OF HONG KONG School of Accountancy ACY 3161 – Taxation (1 st Term, 2011-2012) Assignment 5 Due Date: November 28, 2011 (Monday) 4:00 p.m. Question 1 Mr. Wong is a trader of toys in Hong Kong. The accounts are made up to 31 March each year. The following is the profit and loss account of the business for the year ended 31 March 2010: $ Sales 2,000,000 Cost of sales 1,090,000 Gross profit 910,000 Other income: Interest income (Note 1) 60,000 970,000 Less Expenses: Bad debts (Note 2) 12,000 Customs excise and expenses 15,000 Depreciation 150,000 Donations (Note 3) 50,000 Entertainment (Note 4) 60,000 Insurance 8,000 Interest on bank overdraft (Note 5) 40,000 Legal and professional fees (Note 6) 11,000 Motor car expenses (Note 7) 15,000 Profits tax paid 10,000 Proprietor's salary 24,000 Rent and rates (Note 8) 60,000 Retirement scheme contributions (Note 9) 50,000 Staff salaries 200,000 Sundry expenses (Note 10) 18,000 Telephone 12,000 Transportation (Note 11) 95,000 Utilities 12,000 Data file: ch/ACY3161ass4_1112_1 st _Answer Page 1
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Water and electricity 6,800 848,800 Net Profit for the year 121,200 Data file: ch/ACY3161ass4_1112_1 st _Answer Page 2
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Notes: 1) Interest income includes: $ Interest on foreign currency deposits placed with Bank of America in New York 40,000 Interest on Mr. Wong's private savings deposit in Hong Kong 20,000 60000 2) Breakdown of bad debts: $ Increase in general provision for bad debts 2,000 Write off of trade debts 7,000 Increase in specific provision for bad debts 1,500 Write off of a personal loan to staff 1,500 12000 3) These were cash donations made to the Hong Kong Community Chest. 4) It was agreed with the Inland Revenue Department (IRD) that 25% of the entertainment expenses were attributable to Mr. Wong 's private expenses. 5)
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ACY3161ass5_1112_1st%5b2%5d%28new%29 - THE CHINESE...

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