Kenwide Enterprises Ltd. is a distributor of wines and spirits. The profit and loss
account for the year ended 31 December 2005 is as follows:
Sh. Sh.
Purchases
Staff wages
Rent and rates
Distribution and office
expenses
Traveling
Repairs and maintenance
Discount
Bad debts
Subscription
Bank charges & interest
1,000,000
850,000
92,500
445,500
256,000
85,600
156,000
122,100
25,000
24,000
35,500
Sales
Discounts
Provision for bad and
doubtful debts
Profit on sale of assets
Insurance recovery
3,655,000
355,000
35,500
65,500
170,000

Loss on sale of assets
Legal fees
Audit fees
Depreciation
Gross profit
95,000
41,500
126,000
917,300
4,282,000
_______
4,282,000
Notes:
1. 10% of rent and rates relate to directors.
2. Distribution and office expenses includes the following
expenses:
Directors personal expenses
Contribution to a sports club – employees use it
Donations
Loss on staff canteen
Sh.
31,550
30,000
22,000
12,000
3. Repairs and maintenance include extension to an office
block
40,000
4. Subscriptions are to trade associates.
5. Travelling expenses include business trip to Dubai to
attend a trade exhibition.
56,000
6. Legal charges include the following:
Acquisition of copyrights
Debt collection
Renewal of lease for 99 years
Fines and defence of legal suits
Employment contract
25,000
21,000
18,000
11,000
5,000
7. Insurance recovery is in connection with stolen stock in
the previous year.
8. Bad debts provision is reduced in general provision.
Required:
(a) Prepare a tax computation. (14 marks)

(b) Compute the tax liability and indicate the due date. ( 2 marks)
(c) Compute the instalment tax payable in 2006 and indicate the respective due
date(s). ( 4 marks)