Mrs. S is the owner of a supermarket in Downtown Miami. Her accounts clerk
has submitted to you the following trading profit and loss account for the year ended
31 December 2005:
Sh. Sh.
Opening stock
Purchases
Salaries and wages
Donations to U.S
Chamber of Commerce
Redundancy payments
Contributions to registered
pension fund
Rent, rates and taxes
Insurance
Legal and professional fees
8,640,000
96,000,000
1,500,000
100,000
600,000
100,000
110,400
14,880
109,200
Closing Stock
Sales
Proceeds from sale of land
allocated to her by the
Government
Gain on sale of shares
Gain on sale of residential
plot
General bad debts recovery
Dividends (Net)
1,004,000
110,000,000
500,000
200,000
400,000
36,000
43,200

Depreciation
Advertising
Value Added Tax
Customs duty – 2005
Income tax for 2004
Medical expenses – Mrs. S.
Nkuraru
Interest on bank overdraft
Purchase of equipment
Christmas gifts to customers
General bad debts
Household expenses
Stationery and postage
Net profit
363,840
166,800
247,200
700,000
312,000
28,800
49,920
25,200
20,160
55,200
100,800
33,120
2,905,680
112,183,200
_________
112,183,200
The following additional information is provided:
1. Rent, rates and taxes include sh.20,400 being customs duty for the purchase of
equipment.
2. Sales include a sum of Sh.120,000 representing the value of goods withdrawn
for use by Mrs. S and her children. These goods had been purchased
at a cost of Sh.96,000.
3. Opening stock as well as the closing stock are consistently overvalued by 20%
above cost price.
4. The legal and professional fees are analysed below:

Sh.
Appeal to local committee against tax
assessment
Renewal for 5 year lease
Defending a suit for breach of trade
agreement
Court fines
Miscellaneous (allowable)
24,000
25,200
36,000
20,400
3,600
109,200
5. Wear and tear allowances were agreed at Sh.259,200.
6. Included in advertising expenses is a sign board erected at the road junction
leading to the supermarket at a cost of Sh.24,000.
Required:

(a) Mrs. S’ chargeable profit for the year of income 2005.
(14 marks)
(b) The tax payable on chargeable profit and state when it is payable.
( 4 marks)
(c) State the tax position if the tax payable is not paid on the due date.
( 2 marks)