Question 5b
| Note | £ | £ | |
|---|---|---|---|
| Gross profit | 127,100 | ||
| Operating expenses | |||
| Depreciation | 27,240 | ||
| Gifts and donations | 1 | 2,300 | |
| Impairment loss | 2 | 1,600 | |
| Leasing costs | 3 | 4,400 | |
| Other expenses | 4 | 205,160 | |
| (240,700) | |||
| Finance costs | |||
| Interest payable | 5 | (6,400) | |
| Loss before taxation | (120,000) | ||
| Note 1 – Gifts and donations | |||
| Gifts and donations are as follows: | £ | ||
| Gifts to employees (food hampers costing £60 each) | 720 | ||
| Gifts to customers (calendars costing £8 each and displaying Retro Ltd’s name) | 480 | ||
| Political donations | 420 | ||
| Qualifying charitable donations | 680 | ||
2,300 |
Note 2 – Impairment loss
On 31 March 2015, Retro Ltd wrote off an impairment loss of £1,600 relating to a trade debt. This was in respect of an invoice which had been due for payment on 10 November 2014.
Note 3 – Leasing costs
The leasing costs of £4,400 are in respect of a motor car lease which commenced on 1 April 2014. The leased motor car has CO2 emissions of 145 grams per kilometre.
Note 4 – Other expenses
The figure of £205,160 for other expenses includes a fine of £5,100 for a breach of health and safety regulations, and legal fees of £4,860 in connection with the defence of Retro Ltd’s internet domain name. The remaining expenses are all fully allowable.
Note 5 – Interest payable
The interest payable is in respect of the company’s 5% loan notes which were repaid on 31 July 2014. Interest of £9,600 was paid on 31 July 2014, and an accrual of £3,200 had been provided for at 1 April 2014. The loan notes were issued in order to finance the company’s trading activities.
Additional information
Plant and machinery
On 1 April 2014, the tax written down value of the plant and machinery main pool was £39,300.
The following vehicles were purchased during the year ended 31 March 2015:
| Date of purchase | Cost £ | CO2 emission rate | |
|---|---|---|---|
| Motor car [1] | 8 June 2014 | 14,700 | 124 grams per kilometre |
| Delivery van | 3 August 2014 | 28,300 | 162 grams per kilometre |
| Motor car [2] | 19 October 2014 | 12,400 | 86 grams per kilometre |
Previous results
Retro Ltd commenced trading on 1 September 2012. The company’s results for its two previous periods of trading are as follows:
| Year ended | Period ended | |
|---|---|---|
| 31 August 2013 | 31 March 2014 | |
| £ | £ | |
| Tax adjusted trading profit | 56,600 | 47,900 |
| Bank interest receivable | 1,300 | 0 |
| Qualifying charitable donations paid | (540) | (330) |
Future results
Retro Ltd is expected to return to profitability in the year ended 31 March 2016 and to continue to be profitable in subsequent years.
Required:
(b) Assuming that Retro Ltd claims relief for its trading loss as early as possible, calculate the company’s taxable total profits for the year ended 31 August 2013 and for the seven-month period ended 31 March 2014. (4 marks)